Republicans propose cutting SEC budget by 7% compared to Biden era

Republicans plan to cut SEC budget and limit oversight

U.S. House Republicans proposed a budget for fiscal year 2026 that would provide the U.S. Securities and Exchange Commission with just over $2.03 billion in funding, a 7% cut (approximately $153.9 million) from the fiscal year 2025 budget (data source: House Appropriations Committee).

The proposal also prohibits the SEC from using budget funds to enforce cybersecurity incident disclosure rules enacted during the Biden administration. Under the rules, which take effect in mid-2023, public companies and foreign issuers must disclose major cyberattacks within four days, unless the incident may pose a national security or public safety risk, and companies must disclose their cyber risk management strategies annually.

Republican subcommittee chairman Dave Joyce claimed the move was intended to "control wasteful spending" and prevent "excessive regulation that undermines corporate competitiveness."

Controversy sparked by cybersecurity disclosure rules

The cyber disclosure rule has been controversial since its implementation. In May, banking industry groups asked the SEC to repeal the rule, saying it had been used as a tool for extortion by ransomware criminals and posed additional risks to businesses.

Coinbase is a prime example. In May, the exchange disclosed that some of its customer support contractors had been bribed to leak user data, leading to a $20 million ransom demand from hackers and a series of lawsuits. Although Coinbase refused to pay the ransom, the incident is estimated to have resulted in losses of up to $400 million (source: Coinbase company disclosure documents). Cases like these have raised concerns among businesses that mandatory rapid disclosure could exacerbate the threat of ransomware attacks.

Investors worried about loose regulations amid strong opposition from Democrats

Democrats slammed the funding plan, calling it "a blow to ordinary Americans." Appropriations subcommittee chairman Dave Joyce claimed the measure would help "control wasteful spending."

Democratic lawmakers also pointed out that weakening the SEC's budget would not only affect the enforcement of online disclosure rules, but also limit its ability to collect long-term data on stock and options trading, and could hinder the advancement of new rules for private securities issuance, ultimately weakening market transparency and investor protection.

Investor sentiment and future uncertainty

Investors were divided on the move.

• Optimists believe that budget cuts can reduce "cumbersome regulations" and allow companies to respond more flexibly to cyber risks rather than being tied down by excessive disclosure requirements.

• Those who are concerned believe that this may undermine market confidence, especially in areas such as cryptocurrencies and financial technology, and reduce protection for investors and consumers.

In the coming months, the funding plan will continue to be negotiated between the House of Representatives and the Senate, and whether it will ultimately be implemented remains to be seen. However, what is certain is that changes in the tightness or looseness of the US regulatory environment will directly affect market confidence and capital flows.

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