Dive Brief:

• The Securities and Exchange Commission (SEC) plans to build up its cryptocurrency unit from 30 to 50 enforcers by adding 20 supervisors, investigative staff attorneys, trial counsels and fraud analysts to the team, according to a press release Tuesday. 
• The agency is renaming the crypto enforcement group the “Crypto Assets and Cyber Unit” — from its previous iteration as simply the “Cyber Unit,” the SEC said.
• The revamped enforcement team will focus on investigating violations in securities law related to crypto asset offerings, exchanges and lending, as well as staking products, decentralized finance (DeFi) platforms, nonfungible tokens (NFTs) and stablecoins.  

Dive Insight:

The SEC is looking to bulk up its crypto enforcement team to combat scams and fraud in the digital asset space. 

"Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space. Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants," Gurbir Grewal, director of the SEC’s Division of Enforcement, said in the press release. "The bolstered Crypto Assets and Cyber Unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges."

Since the Cyber Unit's inception in 2017, the SEC has filed more than 80 enforcement actions pertaining to fraudulent and unregistered crypto asset offerings and platforms, resulting in monetary relief of more than $2 billion, the agency said in the release. 

The unit has also brought enforcement actions against companies that fail to manage and disclose cybersecurity risks and incidents.

The SEC's decision to add 20 crypto enforcers and rebrand the team demonstrates a recent push by the agency, under Chairman Gary Gensler, to regulate digital asset markets with stricter oversight. 

“We just don’t have enough investor protection in crypto finance, issuance, trading or lending,” Gensler told lawmakers in September, likening the space to “the Wild West.”

The SEC recently issued guidance saying that companies should disclose the risks to investors from cryptocurrencies held on behalf of customers and account for the assets as liabilities.

"The U.S. has the greatest capital markets because investors have faith in them, and as more investors access the crypto markets, it is increasingly important to dedicate more resources to protecting them," Gensler said in Tuesday's press release. "By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity."