SEC Chair Gensler Faces Scrutiny Over Staff Hiring Practices

Gary Gensler, chair of the Securities and Exchange Commission (SEC), is facing scrutiny for his staff hiring decisions at the regulatory agency. Republican lawmakers have initiated an investigation into these hiring practices, suggesting that political biases may have influenced recruitment decisions.

A letter signed by Republican lawmakers Patrick McHenry, James Comer, and Jim Jordan disclosed that the Committees on Judiciary, Financial Services, and Oversight and Accountability have launched the inquiry under the Civil Service Reform Act of 1978. The letter states, “Recently, the Committees learned that the SEC may be hiring civil service employees based on their political affiliations. We write to request relevant documents and information regarding these allegations.”

The trio of U.S. Representatives requested documents relating to SEC applicant consideration, employment, termination, and staff transfers. According to the letter, the SEC has until 5 p.m. ET on Sept. 24 to comply.

The investigation adds another layer of pressure on Gensler during his tenure as SEC chair. Members of the digital asset community and pro-crypto legislators have also criticized Gensler for what they describe as unclear regulatory practices. According to the web3 community, Gensler and the SEC have adopted an enforcement-first approach to regulation, with some arguing that the agency lacks the constitutional authority to oversee cryptocurrencies.

Eric Turner, Ryan Selkis’ successor at Messari, has openly criticized the SEC over its $1.5 million settlement with eToro. Turner stated, “Chair Gensler publicly stated new rules were needed for digital assets, but later switched his position to the lie that existing rules would be workable. Since then, he’s spent most agency resources fighting for jurisdiction, rather than protecting investors.”

Crypto regulations remain a significant focus in Washington and across U.S. jurisdictions. A bipartisan bill, known as the Financial Innovation and Technology for the 21st Century Act (FIT 21), was recently passed in the House of Representatives, despite opposition from the White House. If passed by the U.S. Senate, the Commodity Futures Trading Commission (CFTC) would take on a substantial portion of crypto oversight. FIT 21 aims to place digital asset exchanges like Binance and Coinbase under the CFTC’s regulatory scope.

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