House Republicans Propose 7% Budget Cut for SEC, Targeting Cybersecurity Disclosure Rule
United States House Republicans have introduced a proposal to reduce the Securities and Exchange Commission’s (SEC) 2026 budget by 7%, aiming to roll back several regulatory measures introduced during the Biden administration. One key target of the proposed cuts is enforcement funding for a cybersecurity disclosure rule affecting public companies.
Proposed Budget Cuts Seek to Reduce “Wasteful Spending”
On July 15, a House Appropriations subcommittee approved a $23.3 billion funding package for fiscal year 2026, covering several federal agencies, including the SEC and the U.S. Treasury.
The @HouseAppropsGOP FY26 FSGG bill just advanced through subcommittee markup.
This bill:
💰Ensures fiscal responsibility
💻Leverages new technology
🪖Strengthens national security pic.twitter.com/8bROydt51n— Dave Joyce (@RepDaveJoyce) July 21, 2025
The proposal represents an 8% overall funding cut, or approximately $410 million less than the budget for the fiscal year ending September 30, 2025. Representative Dave Joyce, the subcommittee’s chair, described the move as an effort to “rein in wasteful spending.”
The proposed budget reductions align with broader Republican efforts to dismantle or weaken key regulatory frameworks, particularly those introduced under President Joe Biden that impact financial markets and cryptocurrency.
SEC Budget Slashed by $154 Million
Under the new plan, the SEC would receive $2.03 billion, down from $2.18 billion in the previous year — a reduction of approximately $153.9 million.
In addition to the funding cut, the bill includes several spending restrictions, most notably a ban on using funds to enforce a cybersecurity disclosure rule adopted in 2023. This regulation requires public companies and foreign issuers to report material cybersecurity incidents within four business days, unless a national security exemption applies.
The rule also mandates annual disclosures on cyber risk management and governance practices. The SEC had previously requested $2.149 billion for the upcoming fiscal year to support a staff of 4,101 full-time employees — a request that the Republican proposal falls short of meeting.
Financial Industry Criticism of Cyber Disclosure Rule
The cybersecurity rule has faced pushback from banking and financial advocacy groups. In May 2025, a coalition of these organizations asked the SEC to withdraw the rule, claiming it could be “weaponized” by ransomware actors to pressure companies into paying extortion demands.
One high-profile incident involved Coinbase, which disclosed in May that third-party contractors leaked user data following bribery attempts. Coinbase refused a $20 million ransom and warned the fallout could lead to up to $400 million in damages. The firm now faces multiple lawsuits over the data breach.
Broader Restrictions on SEC Activity
The Republican-backed proposal also contains measures restricting the SEC’s ability to:
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Collect personally identifiable information through market surveillance systems.
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Implement new regulations on private securities offerings.
These additional restrictions reflect a broader attempt to curtail the SEC’s regulatory reach across multiple sectors, including crypto, financial markets, and private investments.
Democrats Decry Budget as Harmful to Consumers
Democrats have strongly opposed the proposed funding plan. On social media, the House Appropriations Committee Democrats called the bill a “blow to everyday Americans,” warning it would weaken regulatory oversight and enable corporate misconduct.
Ranking Committee Member Rosa DeLauro stated that the proposed cuts would permit “greedy corporations [to] cheat on their taxes, poison consumers, and scam everyday Americans.”
The legislation is expected to face further scrutiny and debate as it moves to the full House Appropriations Committee and possibly the Senate, where the Democrat-led chamber may push back against the proposed reductions.
