If Trump wins, he’d probably still have to live with Gensler for a while

As former President Donald Trump continues to tout himself as the pro-crypto candidate, he has set his sights on the industry’s biggest villain: US Securities and Exchange Commission Chair Gary Gensler.

“Gensler is very much against it,” Trump said of the SEC head’s approach to the cryptocurrency industry during a May event promoting the former president’s NFT collection at Mar-a-Lago.

Jacob Helberg, an adviser to data analytics provider Palantir and one of Trump’s newest donors, told Reuters earlier this month that Trump plans to end the current “crusade against crypto…within one hour” of taking office.

Trump last month paid a visit to bitcoin mining executives, where he apparently said he was interested in keeping the industry state-side. However, his team has been relatively tight-lipped about specific crypto-related policies.

Former Republican presidential candidate Vivek Ramaswamy has said he is “impressed” by Trump’s interest in crypto. Previously, Ramaswamy unveiled a lengthy crypto policy proposal last November. Among other things, this plan suggested firing most of the SEC.

“Crypto innovators and others in the technology sector are under attack from Biden and Democrats,” Trump senior advisor Brian Hughes told Blockworks. “While Biden stifles innovation with more regulation and higher taxes, President Trump is ready to encourage American leadership in this and other emerging technologies.”

The Trump campaign did not elaborate on any plans related to the SEC and its oversight of the crypto industry.

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Gensler, appointed in 2021, has just under two years left in his term before he is either renominated or replaced. Even if Trump moves into the White House in January, Gensler would still have 17 months left on his tenure.

Whether or not Trump could remove Gensler immediately — or if he intends to — is less clear. Article II of the Constitution does not expressly grant the president this power, nor does the Securities Exchange Act of 1934.

It’s an issue that arose in John McCain’s 2008 presidential campaign, when he said he would fire then-SEC Chair Chris Cox.

“Courts’ general view is that the President can only remove a commissioner, including the Chairman, of the SEC ‘for inefficiency, neglect of duty, or malfeasance in office,’” Jon Ammons, partner in Reed Smith’s On Chain digital asset group, said.

A 2008 DC Circuit court ruling stated that Commission members are only “subject to removal by the President for cause.” This opinion was upheld by the Fifth Circuit in 2022 in SEC v. Jarkesy et al., which eventually made its way to the Supreme Court and is now pending a ruling.

Other cases where the court has ruled the same include Duka v. SEC in the Southern District of New York in 2015, and SEC v. Blinder, Robinson Co. in the Tenth Circuit in 1988.

“But all of these cases largely rest on a stipulation from a 2010 Supreme Court case (Free Enterprise Fund v. PCAOB) where the parties agreed that SEC commissioners could only be removed for-cause,” Ammons said. “The Supreme Court therefore assumed that was the case, but did not actually adjudicate the question.”

In an amicus brief filed with the Supreme Court in SEC v. Jarkesy, Andrew Vollmer, senior affiliated scholar at George Mason University, argued that the president actually does have the power to remove SEC Commissioners, with or without cause. While Article II does not expressly give the president this power, it also does not expressly restrict it, Vollmer said. So, firing is fair game.

Last year, four House Republicans attempted to remove Gensler themselves with the SEC Stabilization Act, a bill spearheaded by Rep. Warren Davidson, R-Ohio. The proposed legislation was referred to committee but has not advanced to markup.

President Joe Biden earlier this month submitted his nomination for SEC Commissioner Caroline Crenshaw’s second term. Her current term expired on June 5. Commissioners may serve an additional 18 months after their term ends if no replacement has been assigned. The Senate is expected to vote on Crenshaw’s nomination next month.

The next president will have three SEC Commissioners to either renominate or replace. After Crenshaw, Commissioner Hester Peirce’s term expires in 2025. Commissioners Jaime Lizárraga and Mark Uyeda’s terms expire in 2027 and 2028, respectively.

Peirce and Uyeda have emerged as crypto allies at the SEC in recent months, with both voting in favor of the agency’s January approval of bitcoin spot ETFs.

Last month, Trump became the first former US president to become a convicted felon when a New York jury found him guilty of 34 counts related to an alleged hush money payment and an attempt to influence the 2016 election. Trump is scheduled to be sentenced on July 11, although legal experts have said his sentence will likely be stayed pending his appeal, which could take a year.

Trump has also been indicted in three separate cases related to alleged election interference and retention of classified documents. In total he has been charged with 54 additional felonies.

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