Gensler’s next move: How SEC leadership could evolve under Harris or Trump

Multiple scenarios could unfold following the U.S. presidential election in November amid promises from candidate Donald Trump to fire agency chair Gary Gensler that could ultimately influence crypto regulation and enforcement. 

Securities and Exchange Commission Chair Gary Gensler could stay on at the agency as a commissioner if Trump wins the election, investment bank TD Cowen wrote in a note on Monday. That, in turn, would "deprive the GOP of a majority" at the SEC, according to the note.

If that shift happens, policies on crypto could be held at a standstill.

"Were that to happen, crypto policy may get stuck. Enforcement likely would ease as the SEC chair can influence what cases get elevated to the board. Yet it would be difficult to adopt regulatory changes or to accept settlements of existing legal fights if the Democrats have the majority," TD Cowen Washington Research Group, led by Jaret Seiberg, wrote in the note.

The SEC's leadership is made up of up to five commissioners appointed by the President based on advice and consent from the Senate, and there cannot be more than three commissioners from the same political party. Currently, there are two Republican commissioners — Hester Peirce and Mark Uyeda — as well as three Democratic commissioners — Jaime Lizárraga, Caroline Crenshaw and Gensler. Gensler's term at the SEC ends on June 5, 2026.

'The norm is to step back'

Trump could also try to fire Gensler, Seiberg wrote. Trump, who has been very vocal about outlining his crypto platform, said at the Bitcoin 2024 conference in July that he would replace Gensler if elected. The crypto industry has repeatedly criticized the chair over his approach to regulating digital assets and his pursuit of enforcement actions against big names, including Coinbase and Binance. Gensler, meanwhile, has asserted that most cryptocurrencies are securities and has called on crypto platforms to register with the agency.

Protections for commissioners are unclear, Seiberg said.

​​"Yet we believe this would get litigated and Gensler likely would win," Seiberg added. "This is because it is hard to see the point of having bipartisan commissions if Presidents can fire the opposing party's members for any reason."

Gensler could decide to stay on at the SEC as commissioner if Trump becomes president, said former Republican SEC Commissioner Michael Piwowar in an interview with The Block. Piwowar was appointed to that spot in 2013 by former President Barack Obama and was designated acting SEC chairman by Trump in 2017. Piwowar is now the executive vice president of Milken Institute Finance at the nonpartisan think tank.

"The norm is to step back," Piwowar said, citing when former SEC Chair Mary Jo White stepped down on Trump's inauguration day and Piwowar became acting chair.

Reconfirmation vote on Crenshaw as key

Meanwhile, Democratic Commissioner Caroline Crenshaw, who has been critical of crypto and specifically the approval of spot bitcoin products, was nominated in June to stay on but still needs confirmation from lawmakers. Whether or not she is reconfirmed could be a factor in what happens next at the SEC, Piwowar said.

If she is not reconfirmed and Trump becomes president while Gensler stays on as a commissioner, Trump could designate one of the existing Republican commissioners to become acting chair, Piwowar said. The SEC's Republican commissioners Uyeda and Peirce have both been friendly toward crypto. Trump could also then nominate a Republican for Crenshaw's slot, Piwowar added. 

If Crenshaw is reconfirmed and stays at the SEC, that could leave the agency's leadership in its current Democratic majority with Gensler, Crenshaw and Lizárraga, though with a Republican chair.

"Even in a minority commission, the chairman would have a lot of power to do things," Piwowar said. The chair can put their own people at senior levels and make personnel decisions, Piwowar added.

Rulemakings could prove difficult, but it is possible to get commissioner votes on noncontroversial issues, Piwowar said. SEC commissioners often vote along party lines when making decisions on whether to adopt certain rules. A Republican SEC chair could also direct staff to halt certain rulemakings that are already in progress and can make decisions on whether or not to appeal in court, he added. The SEC has numerous crypto-related cases going through the courts, including against Kraken , Binance and Coinbase .

Most enforcement actions would go forward since many generally are not really controversial, though crypto could be an outlier, Piwowar said.

"Some of the more controversial ones, say in the crypto space, the new chairman could put an enforcement director in that might have a different view on those cases, and so they can make decisions as to whether to continue an investigation, whether to continue fighting in court, whether to continue to appeal certain cases," Piwowar said.

It's not necessarily a given if Trump is elected that a new SEC chair would bring fewer enforcement cases, Piwowar said. Former SEC Chair Jay Clayton, nominated by Trump, authorized the case against Ripple, he said. The SEC accused Ripple in 2020 of raising $1.3 billion through the sale of XRP, which it says is an unregistered security.

"A lot of people think that was a Gary Gensler case, but Gary inherited that from Jay," Piwowar said.

The SEC also has multiple rulemakings in the pipeline that could affect crypto. One rule, which was first proposed in January 2022 and was reopened for comments in April, broadens the definition of an exchange to capture decentralized exchanges and could ultimately require decentralized projects to register with the agency as alternative trading systems. That rulemaking has garnered hundreds of comment letters over the years.

"The new chairman coming in would be able to take a fresh look at every rule, including ones that affect the crypto industry and the ones that are out in the comment period," Piwowar said, "and decide whether or not to move forward with certain rulemaking, but would need commissioners' votes."

If Harris moves into the top spot

Harris hasn't signaled her views on crypto and has not been as publicly supportive of crypto as Trump. Her team began reaching out to the crypto industry shortly after President Joe Biden announced he would not be seeking reelection and endorsed Harris to replace him as the Democratic Party's nominee. Since then, Harris has bulked up her team with crypto insider David Plouffe as well as Biden's former economic aides, Brian Deese and Bharat Ramamurti. Some in the crypto industry criticized the move to add Ramamurti and Deese and said they were behind the Biden administration's anti-crypto stance.

Harris would have to decide if Gensler should continue to chair the SEC, Piwowar said. If she decides not to keep him as chair and Gensler stays on as a commissioner, Harris would have to decide whether to nominate one of the current Democratic commissioners to the top post, he said. If Harris doesn't want Gensler, Crenshaw or Lizárraga to become chair, it would be hard to fire Gensler as chair, Piwowar added.

Harris could also suggest not renominating Crenshaw and putting in a new commissioner to become chair of the SEC, he said.

Harris' SEC decisions are unclear and it's uncertain whether she would choose a chair that will continue to be aggressive in enforcement cases against the crypto industry, Piwowar said.

Others weighed in as well on whether Gensler would stay on as a commissioner at the SEC. Ashley Ebersole, general counsel at 0x Labs and former SEC lawyer, said scholars and courts generally agree that the president can remove someone as chair but are less clear on removing a commissioner.

"Direction of crypto regulation will be dictated by which party wins the White House. Whoever is president has the power to either direct activities of financial regulatory agencies or appoint agency heads with known views and then allow them to lead the way," Ebersole said in an email.

It would be "bizarre" for Gensler to not step down, said Teresa Goody Guillén, a partner at BakerHostetler law firm and former litigation counsel for the SEC.

"Prior administrations and chairs have respected the prerogatives of incoming administrations, so this is a bizarre proposition," she said in an email. "It’s surprising and disheartening that a chair would not respect the process."