Representative Warren Davidson admits he might not have the votes to fire Gary Gensler, but the crypto-friendly Ohio Republican wants the SEC chairman to rein in his attack on the digital-assets industry.
“The SEC Stabilization Act puts pressure on Gensler to kind of knock it off because a lot of people are taking notice of how politicized his actions have become,” says Davidson, who adds it would be a “tough path” to enactment of the proposal.
According to a draft reviewed by Forbes, the legislation introduced in the Financial Services Committee aims to restructure the SEC leadership, replacing the chairman position with an executive director appointed by SEC commissioners.
Currently, the SEC has five commissioners with staggered five-year terms and a chairman appointed by the president from among them. The new committee would include three Democratic commissioners and three Republicans, with two terms ending every other year on a six-year schedule. Replacements would be named by the president, one from each party, and the commissioners would choose the executive director. One wrinkle: the executive director cannot be a former SEC chairman, which would rule out Gensler ever being in charge of the agency again.
The bill has Republican support to potentially make it out of committee and onto the House floor, though approval by the Democrat-dominated Senate is unlikely. Four House Republicans are cosponsoring the bill: Reps. Marjorie Taylor Greene (R-Ga.), Byron Donalds (R-Fla.), Daniel Meuser (R-Pa.) and Tom Emmer (R-Minn.). Gensler, a Democrat, is the subject of a partisan and personal attack, says a spokesperson for Rep. Stephen Lynch (D-Mass.), a member of the Financial Services Committee and ranking member on the subcommittee for digital assets.
“They’re claiming we need to restructure the leadership of the SEC, but in the same sentence [Davidson] is saying this is essentially an attack on Chairman Gensler,” the spokesperson tells Forbes.
Davidson’s bill was introduced on June 12, a week after the SEC sued Coinbase and Binance for failing to register with the commission. Davidson says the agency has not explained how crypto exchanges could do so.
One goal of Davidson’s bill is to show other representatives that Congress needs to provide standardized rules for digital assets, rather than allowing regulators to define them.
But legislators have been unable to draft such laws, in part because of the industry turmoil last year that culminated in the failure of the FTX exchange but also because of a divide between Democrats seeking investor protections and Republicans who prefer to encourage innovation.
A market structure bill, introduced by the chairmen of the House Finance and Agriculture committees on June 2, is meant to “fill in the gaps” of the regulatory process for digital asset companies, according to a statement from the sponsors.
Democrats don’t think much of this bill either, Lynch’s spokesperson said. “We really believe this creates a light-touch regime that we worry other players could take advantage of.”