The Securities and Exchange Commission, one of the key federal regulators seeking to control the crypto industry, is struggling to recruit crypto experts, according to a new report. report of the agency’s inspector general.
Most federal agencies have an Office of Inspector General or an independent authority that reviews and supervises the operations of, for example, the Federal Trade Commission or the Social Security Administration. Thursday’s SEC division published a report on “management and performance challenges” from the financial regulator in October.
These challenges include keeping pace with evolving technologies, like AI, as well as maintaining an informed workforce. “[T]The SEC also faces challenges in recruiting crypto asset specialists, which Enforcement considers essential to strengthening its capabilities to investigate new and emerging issues in the crypto asset markets,” the Office of the Attorney General wrote. ‘Inspector General.
As for why the SEC is having trouble recruiting crypto experts, the report cites a “small pool of qualified expert candidates,” competition with attractive firms. private sector offers, and candidates’ frequent conflicts with rules prohibiting the holding of cryptocurrencies. “This ban, according to SEC officials, has been detrimental to recruiting because applicants are often unwilling to give up their crypto assets to work for the SEC,” the report reads.
The federal agency has already complex ethical rules which prohibit employees who, for example, hold shares in a company, from commenting on the requests that the company submits to the regulator.
The SEC’s struggles to attract crypto talent come amid a broader decline in hiring in the industry as well as the regulator’s acceleration of crypto enforcement measures over the past year. Since the collapse of crypto exchange FTX in November 2022, the SEC has doubled down on its enforcement actions, filing a series of lawsuits against companies and individuals large and small.
In January, the agency for follow-up Gemini and Genesis for their Gemini Earn program, a yield-generating product that the SEC determined was akin to an unregistered security. Next, SEC Chairman Gary Gensler set his sights on even bigger crypto numbers: Justin Sun And Make Kwon, both of whom were accused of selling unregistered securities. And in June, it fought with the two largest crypto exchanges, Binance and then Coinbase.
While the criminal trial (and possibly conviction) from FTX co-founder Sam Bankman-Fried has overshadowed SEC actions over the past month, Gensler has consistently gone all-in on crypto companies. He recently set his sights, with the Ministry of Justice, on Safe Moon.
The SEC did not immediately respond to a request for comment when contacted by Fortune.