Securities and Exchange Commission (SEC) chair Gary Gensler could be facing unemployment after United States Representative Warren Davidson declared he would introduce legislation to fire the SEC boss.
In an April 15 tweet responding to Coinbase’s legal chief, Paul Grewal, the crypto-friendly congressman announced his intention to have Gensler removed from his role after the SEC’s latest announcement about revisiting the proposed redefinition of an “exchange.”
"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)," Davidson tweeted.
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
“Former Chairs of the SEC are ineligible,” he added.
Gensler said in an April 14 meeting the proposed rule amendments could benefit investors and markets by bringing certain brokers under additional regulatory scrutiny as well as "modernizing" rules that define an exchange.
Similar amendments were proposed in January 2022. At the time, crypto advocacy groups suggested it was an overreach of the SEC’s authority that could jeopardize participation in the space.
SEC commissioner Hester Peirce — known as “Crypto Mom” for her pro-crypto positions — criticized the new proposed rule amendments in an April 14 statement, declaring “stagnation, centralization, expatriation, and extinction are the watchwords” of the latest move by the SEC.
“Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology,” Peirce said.
“Accordingly, I dissent,” she added.
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
According to Peirce, unlike in the past when the SEC embraced new technology, the modern regulator has been expanding its reach to solve problems "that do not exist.”
She further opined the SEC has taken the approach of refusing to alter current regulations to allow room for new technologies and new ways of doing business.
“Today’s Commission tells entrepreneurs trying to do new things in our markets to come in and register,” Peirce said.
“When entrepreneurs find they cannot, the Commission dismisses the possibility of making practical adjustments to our registration framework to help entrepreneurs register, and instead rewards their good faith with an enforcement action.”
Peirce also accused the SEC of using the “notice-and-comment rulemaking process” as a threat.
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According to Peirce, because of the concerns over the ambiguity and scope of the new proposed rule changes and the SEC’s “limited understanding” of the space, a concept release should have been issued instead.
“I wish we had proceeded differently," Peirce said.
Over the last few years, the SEC has launched more than a few high-profile actions against crypto companies such as Ripple, LBRY and Coinbase over alleged violations.
It has also taken aim at staking and stablecoins, prompting some critics to argue the SEC has been using enforcement actions to develop the law on a case-by-case basis rather than creating clear regulations.
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