May 29, 2024
Policy & Regulation

Lawmakers Introduce Bill to Challenge Gary Gensler’s Position as SEC Chair

US Rep. Warren Davidson has taken a bold step by introducing the “SEC Stabilization Act” in an effort to remove Gary Gensler from his position as chair of the Securities and Exchange Commission (SEC). Davidson, who made his intentions known earlier this year, announced the introduction of the bill on June 12. He expressed concern about the need to protect the US capital markets from what he described as a “tyrannical Chairman.” According to Davidson, the legislation aims to rectify the perceived abuse of power and ensure long-term market protection.

Davidson’s co-author on the bill, Rep. Tom Emmer, echoed these sentiments, stating that the SEC Stabilization Act would bring about common-sense changes to prioritize the interests of investors over the alleged whims of a reckless chair. The proposed legislation seeks to redistribute power within the SEC by adding a sixth commissioner, preventing any party from holding a majority on the commission, and establishing an executive director position.

While the lawmakers did not specifically mention cryptocurrency in their statements, it is worth noting that both Davidson and Emmer have been vocal supporters of digital assets and have been critical of Gensler’s leadership at the SEC. Emmer, for instance, has referred to Gensler as a “bad faith regulator.” Additionally, Davidson holds the position of vice chair on the House Financial Services Committee’s Subcommittee on Digital Assets, Financial Technology, and Inclusion.

However, removing an independent agency official like Gensler is a complex process that involves more than a single piece of legislation. Gensler, who assumed the position of SEC chair in April 2021, was nominated by the US President and confirmed by the Senate. As such, removing him from office requires a cause, as established by a 2010 Supreme Court decision. The President can ask an SEC commissioner to resign or apply political pressure, but firing one may not be within their sole authority.

Legal experts have suggested that removing an SEC official would necessitate demonstrating “inefficiency, neglect of duty, or malfeasance,” as outlined by the Supreme Court ruling. While Cabinet secretaries and members of Congress can be asked to leave or expelled, respectively, the process for removing SEC commissioners is more stringent.

Gensler’s recent actions have drawn criticism from both the crypto community and some lawmakers. The SEC’s lawsuits against Binance and Coinbase, accusing them of offering unregistered securities, have sparked outrage. These lawsuits include numerous tokens that the commission now considers to be registered securities, bringing the total to approximately 68 cryptocurrencies.

Davidson’s proposed SEC Stabilization Act was a direct response to a tweet by Coinbase’s legal chief officer, Paul Grewal. If passed into law, the act would restructure the SEC by increasing the number of commissioners to six and redistributing certain powers from the chair to the commissioners.

While Davidson and his colleagues continue their efforts to remove Gensler, it remains to be seen how the legal and political landscape will unfold. The controversy surrounding Gensler’s tenure and his actions against the cryptocurrency industry has certainly brought the issue into the spotlight, prompting discussions about the extent of executive power and the future direction of the SEC.

Image by fabrikasimf on Freepik

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