US SEC Struggles to Recruit Crypto Experts Amid Asset Sale Request

The United States Securities and Exchange Commission (SEC) is struggling to recruit staff with crypto expertise because of rules around ownership.

The U.S. SEC has the cryptocurrency industry as one of its top examination priorities for the new fiscal year. The agency is recruiting staff with crypto expertise, as disclosed in a report published by the SEC’s Office of Inspector General (OIG).

In outlining its specialized recruitment challenges, the OIG noted that the SEC needs to hire crypto-savvy employees to strengthen its capabilities to investigate issues relating to the emerging industry. Yet, the agency faces two primary challenges.

First, there is a small pool of “qualified experts,” especially with competition from private sector participants also recruiting for crypto-related roles. Second, the OIG notes that “many qualified candidates hold crypto assets,” which, according to the Office of the Ethics Counsel, prohibits such candidates from occupying SEC roles related to crypto assets.

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The OIG adds that most applicants are unwilling to “divest their crypto holdings to work for the SEC.” Hence, the SEC must find a solution to this challenge if it will remain active in policing the cryptocurrency industry.

Crypto Industry Experts React

The SEC’s struggle to recruit for positions that require crypto experience has raised debates on whether it is ethically correct for the agency to mandate employees to divest their crypto holdings. Specifically, the concerns revolve around whether an individual with no crypto holdings and potentially no current experience interacting with the technology qualifies to enforce rules surrounding its usage.

Chiming in on the subject, Bitwise CIO Matt Hougan argued that an unspoken implication of the SEC’s recruitment requirement is that the agency will primarily recruit staff that dislike cryptocurrencies. According to Hougan, the rule enforces a “strong bias in hiring” as “the only people with “crypto expertise and a willingness to divest 100% of their crypto are deep-seated skeptics.”

An obvious, but unspoken, implication of this is that the SEC will be staffed by people who dislike crypto.

The only people with “crypto expertise” and “a willingness to divest 100% of their crypto” are deep-seated skeptics.

This rule enforces a strong bias in hiring. https://t.co/Z3WG3gzkNY

— Matt Hougan (@Matt_Hougan) November 6, 2023

Bloomberg ETF Analyst James Seyffart described the SEC’s position on employee crypto holdings as “shocking.” Meanwhile, others canvassed for the SEC to allow employees in crypto-related roles to hold at least a modest amount as it would make them better at their jobs. Still, others believe enforcing a responsible disclosure requirement is a better approach than completely banning such employees from holding cryptocurrencies.