Gensler talks climate disclosures, cryptocurrency at Senate hearing

Investor demand is pushing the Securities and Exchange Commission to craft additional public company disclosure requirements on a variety of issues, Chairman Gary Gensler told lawmakers Tuesday.

"Today's investors are increasingly looking for consistent, comparable and decision-useful disclosures around climate risk, so-called human capital, cybersecurity and other areas," Mr. Gensler said before the Senate Banking Committee, in his first congressional testimony since taking office in April. "So I've asked staff to develop proposals for the commission's consideration on these potential disclosures."

Mr. Gensler said any additional disclosures will be put out for public comment before taking effect.

Democrats on the committee welcomed the potential for added disclosures, including Chairman Sherrod Brown, D-Ohio. "Increasing people's trust and faith in the market and the financial system will lead to more saving and broader participation," Mr. Brown said.

Republicans, like Sen. Pat Toomey, of Pennsylvania, the committee's ranking member, have criticized Mr. Gensler for "politicizing" the SEC. "It's not the SEC's role, nor expertise — as an independent financial regulator with zero democratic accountability — to address these political and social issues," Mr. Toomey said.

On cryptocurrency, Mr. Gensler said large parts of the market are operating outside regulatory frameworks that protect investors and consumers, guard against illicit activity and ensure for financial stability.

"I have a belief that (crypto) has been a catalyst for change, but I think if it stays outside of the public policy framework for anti-money laundering, tax compliance, investor protection, it's not going to long persist," Mr. Gensler said following a line of questioning from Sen. Elizabeth Warren, D-Mass., a proponent of added cryptocurrency regulations.

The SEC staff has largely been working remotely for the last 18 months, but last month the agency authorized a voluntary return to the office initiative, Mr. Gensler said. He also told lawmakers that the SEC could use additional staff — its workforce has decreased by about 4% since 2016 when it had 4,650 employees, he said.