No Conflict of Interest: SEC Finds It Difficult to Hire Crypto Staff

In the US, a report from the Office of Inspector General (OIG) has explained the difficulties faced by the Securities and Exchange Commission (SEC) in recruiting crypto asset specialists, resulting from requirements that new recruits to the agency sell any crypto assets that they may be holding.

A Harsh Requirement of the SEC?

The subsection in question, titled “Specialized Recruiting Challenges”, reported that: “Many qualified candidates hold crypto assets, which the Office of the Ethics Counsel has determined would prohibit them from working on particular matters affecting or involving crypto assets. This prohibition, according to SEC officials, has been detrimental to recruiting, as candidates are often unwilling to divest their crypto assets to work for the SEC.”

Prior to this, the report also highlighted competition with the private sector for “a small candidate pool of qualified experts”, and in the next subsection, “Other Recruiting and Attrition Drivers”, goes into further detail, explaining that: “One of the most significant drivers in both recruitment and attrition is competition with the private sector, particularly on wages."

"The SEC employs highly skilled professionals, including attorneys, economists, and accountants. Private sector wages can be substantially higher than the SEC’s pay scale, making private sector positions attractive to both new and seasoned professionals.”

The report in question is 'The Inspector General’s Statement on the SEC’s Management and Performance Challenges', and it was created on October 30. It comes from the OIG, which is responsible for audits, inspections and evaluations, and operates as an independent office within the SEC.

As part of its annual financial report, the SEC is required to include the OIG’s report, which is focused on breaking down the management and performance challenges facing the SEC in the coming fiscal year and beyond.

A Concern for the SEC

The newest report identified “recruiting and retaining a skilled workforce” as a key issue of concern to be addressed by the SEC, and although this challenge is not limited to crypto, it appears that it is particularly relevant to the growing requirement for the SEC to deal efficiently with digital assets and the crypto industry.

Regarding crypto, the report further draws attention to the lack of case law relating to such assets, if they are to be regarded as securities, and suggests that a lack of legal certainty is likely to persist for some time still to come, stating that: “It may take years before the law in this area crystalizes to the point where outcomes are reasonably predictable. This uncertainty may affect the SEC’s enforcement decisions and priorities."