- Calls for SEC Chair Gary Gensler to step down have grown
- The Blockchain Association added to recent comments from US lawmakers regarding Gensler’s approach
- An effort is afoot within the US political sphere to restructure the SEC
Calls for Securities and Exchange Commission (SEC) Chair Gary Gensler to step down have grown, with the Blockchain Association joining several members of US Congress in demanding that he go. Pressure has been increasing on Gensler this year following his rash of enforcement actions against major players in the crypto space and accusations that he is stretching the SEC’s resources too thin and overseeing an agency whose morale is rock bottom and staff turnover is through the roof.
SEC Oversight Committee Savages Gensler’s Reign
The most recent criticism of Gensler began last week in a Congress hearing entitled ‘Oversight of the Securities and Exchange Commission’, the chair of the committee, Bill Huizenga, accused the SEC of “stonewalling” Congress, calling Gensler’s responses to their requests for information on various matters “extremely slow” and, when they did respond, accused the SEC of ignoring questions or providing inadequate answers.
Huizenga also criticized Gensler’s rulemaking bonanza, saying that many of the 46 rule proposals he has put forward “will upend decades of precedence and have little economic analysis to justify their existence,” and argued that the SEC has “completely ignored its mission to promote capital formation, instead opting to create confusion that will ultimately hurt innovation and entrepreneurs who seek access to our markets.”
— Cryptic Poet (@1CrypticPoet) June 22, 2023
Blockchain Association Offers Legal Blueprint
Perhaps using the fact that Gensler’s name is back in the spotlight again, the Blockchain Association published a paper with one core premise: “Chair Gensler is required by law to recuse himself from enforcement decisions related to digital assets.” In the paper, the Blockchain Association claimed that SEC has “all but abandoned its role as a rulemaking body,” laying out in plain terms its chosen path:
Despite continued requests from the industry for regulatory clarity, the SEC has refused to adopt any rules or issue any guidance on this issue, among many others, for over four years. Instead, the SEC has chosen to regulate digital assets solely through enforcement actions.
The paper, the association said, represented a kind of legal blueprint that affected companies and projects could use to argue against the SEC’s blanket policy of all cryptocurrencies bar Bitcoin being securities, pointing out many occasions when Gensler made comments to the effect that the issue of crypto securities was more nuanced than the pivot he has adopted since taking over as head of the SEC.
The Blockchain Association also took issue with the legal standards applied by SEC, saying that Gensler was abusing his position in acting as an adjudicator and that enforcement actions were tainted as a result, before offering a summary of its position:
Chair Gensler’s prejudgment that all digital assets other than bitcoin are securities has undermined the SEC’s ability to make just and equitable enforcement decisions … Chair Gensler should immediately recuse himself from any Wells process involving digital assets, and the SEC should reconsider prior actions initiated with — and possibly tainted by — Chair Gensler’s involvement.
Warren Davidson Renews Call for Gensler to Go
The criticism didn’t stop there. Congressman Warren Davidson, who recently tabled a bill to have Gensler removed from office and the SEC restructured, was interviewed by a crypto YouTuber this week and doubled down on his desire to force Gensler out of office, claiming that the SEC chair is overstepping the boundaries of his position and that his skewed understanding of securities meant that the dollar would fall under his definition as well as all cryptocurrencies bar Bitcoin:
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Even with all this pressure, Davidson noted that there are only two ways in which Gensler can leave his position: either step down or be fired by the President. Sadly, neither of these looks like it will happen anytime soon.