U.S. Representative Warren Davidson has announced his intention to introduce legislation to fire Gary Gensler, the chair of the Securities and Exchange Commission (SEC).
In a tweet on April 15, Davidson responded to Coinbase’s legal chief, Paul Grewal, stating that he plans to replace the position of SEC chairman with an executive director who reports to the board to address what he sees as a long series of abuses.
Yep. To correct a long series of abuses, I am introducing legislation that removes the Chairman of the Securities and Exchange Commission and replaces the role with an Executive Director that reports to the Board (where authority resides). Former Chairs of the SEC are ineligible. https://t.co/VBnkgt8bhM
— Warren Davidson 🇺🇸 (@WarrenDavidson) April 16, 2023
The move comes after the SEC’s recent announcement to revisit the proposed redefinition of an “exchange.” Gensler had stated in a meeting on April 14 that the proposed rule changes could benefit investors and markets by increasing regulatory scrutiny on certain brokers and modernising the rules that define an exchange.
Similar amendments were proposed in January 2022, criticised by crypto advocacy groups who believed it was an overreach of the SEC’s authority that could hinder participation in the crypto space.
SEC commissioner Hester Peirce, often referred to as “Crypto Mom” for her pro-crypto positions, also criticised the proposed rule changes in a statement on April 14. Peirce argued that the SEC’s approach had been focused on stagnation, centralisation, expatriation, and extinction of new technology, instead of embracing the promise of innovation as it has done in the past.
In addition to ironing this t-shirt (which republishes code from a comment letter), will I need to register as an exchange before wearing it? “It depends,” per the SEC’s latest release: https://t.co/mARz8FzNZD pic.twitter.com/xD7Lx2kJE6
— Hester Peirce (@HesterPeirce) April 14, 2023
Peirce further stated that the SEC has been unwilling to adapt current regulations to accommodate new technologies and business models and has used the notice-and-comment rulemaking process as a threat.
Peirce suggested that a concept release should have been issued instead of the proposed rule changes due to concerns over the ambiguity and scope of the regulations, as well as the SEC’s limited understanding of the crypto space. She expressed a wish for a different approach to be taken by the SEC.
In recent years, the SEC has taken action against several high-profile crypto companies, including Ripple, LBRY, and Coinbase, over alleged violations. The SEC has also targeted staking and stablecoins, leading to criticism that the agency has been using enforcement actions to shape the law on a case-by-case basis rather than providing clear regulations.
Rep. Davidson’s proposed legislation to remove SEC Chair Gensler reflects ongoing debates and concerns about the regulatory approach to cryptocurrencies and the potential impact on the industry. The outcome of this legislative effort will be closely watched by the crypto community and market participants alike.
