Gary Gensler SEC Chairman Dismissal Controversy: The Background of Reforms Promoted by Crypto-Friendly Legislators

In 2024, the debate over the potential removal of SEC Chairman Gary Gensler accelerated. The “SEC Stabilization Act,” introduced by House Representatives Warren Davidson and Tom Emmer, suggests that dissatisfaction with Gary Gensler is spreading not only within the crypto community but also throughout Congress. Behind this movement are concerns about the concentration of regulatory authority and a recognition of the need to reform excessive regulation of the crypto industry.

What Lies Behind the SEC Chairman Dismissal Bill

The “SEC Stabilization Act,” officially submitted in June 2024, aims directly at removing Gary Gensler. If passed, it would significantly alter the internal power structure of the SEC. Currently, power is concentrated in the chairman, but a shift toward a joint leadership system with multiple commissioners is proposed.

Specifically, decision-making at the SEC would be carried out by a six-member commission, with no single party able to hold more than three seats. This model draws from the Federal Election Commission (FEC) to prevent political dominance and create a more balanced regulatory environment.

Representative Davidson stated, “America’s capital markets should be protected from the current president’s tyranny,” clearly indicating that the bill’s primary purpose is to address current abuses of power. He publicly declared, “It’s time for real reform, and removing Gary Gensler as SEC Chairman is necessary,” a statement that garnered nearly 4 million views and 44,000 likes.

Warren Davidson and Tom Emmer: Crypto-Supporting Legislators’ Movements

Leading this reform are two legislators known for their understanding and support of the crypto industry. Davidson, representing Ohio since 2016, is a member of the House Financial Services Committee and believes blockchain technology and cryptocurrencies could revolutionize the financial sector. He has repeatedly called on the government to avoid excessive intervention that stifles innovation.

Meanwhile, Tom Emmer is not just a legislator but also the whip of the House majority. Born in 1961, he holds a bachelor’s degree in political science and a J.D., and has served as a House member since 2015. Emmer has explicitly criticized Gary Gensler’s crypto regulations, saying they “suppress innovation in the world’s largest economy,” and has accused the SEC of abusing investigative powers against crypto companies.

He has previously shown a tough stance, calling Chairman Gensler “incompetent.” The bills he has introduced include proposals like the “Securities Transparency Act” and the “Blockchain Regulatory Certainty Act,” which are designed to consider the interests of the crypto industry. The continuous support from these legislators is helping advance crypto regulation reform.

What the Proposed New SEC System Looks Like

The core of the reform plan is decentralization of power. It aims to move away from a single-chairman model like Gensler’s toward a collective decision-making process involving multiple commissioners.

Under the new system, a sixth commissioner and a secretary-general would be added, strengthening oversight of daily operations. However, all rulemaking, enforcement, and investigation powers would remain with the commissioners. This structure makes it institutionally difficult for any one party to control the SEC.

Proponents argue that this balanced system will “protect the US capital markets from potential political issues.” Emmer emphasized, “American investors and industries should be subject to clear and consistent oversight, not political bargaining,” highlighting the importance of this reform.

Turning Point for Bitcoin Spot ETF Approval

Chairman Gary Gensler’s stance on crypto began to show subtle changes in the latter half of 2024. Kathy Wood, CEO of ARK Invest, hinted in a CNBC interview in November that Gensler’s attitude toward ETFs might be driven by political ambitions. She pointed out that Gensler, who aspires to be US Treasury Secretary, has a focus on the US dollar, which has contributed to resistance against approving Bitcoin spot ETFs.

In December, a turning point occurred in Gensler’s attitude. When asked about spot Bitcoin ETF applications, he shifted from outright denial to silence. He stated, “I have no preconceived notions,” and suggested a positive outlook by describing the review process as a “proven process.”

Furthermore, Gensler revealed that the SEC’s “new perspective” considers court rulings in Washington, D.C. “Many of these applications have been rejected in the past, but the courts have spoken here. Therefore, we are re-evaluating based on these rulings,” he said.

SEC official John Reed Stark indicated that approval of a Bitcoin spot ETF could become Gensler’s “political legacy.” With the threat of removal increasing, Gensler may be forced to make a decisive move at the last minute.

Expectations and Challenges for Crypto Regulation Reform

Within the crypto community and parts of Congress, there is hope for Gensler’s removal and the realization of a new SEC system. The issue of the chairman’s future, who has been at odds with the crypto industry for years, symbolizes a broader shift in the US regulatory framework.

Many behind-the-scenes supporters are pushing for reform, including Davidson, Emmer, and others. Their support and efforts could usher in a new era called the “Spring of Oversight.” If transparency and clarity in crypto regulation are achieved, it could lead to a healthier market environment that balances innovation with investor protection.

Regardless of Gensler’s future, progress toward improving the crypto industry’s regulatory environment is underway. The wave of reform that began in 2024 is expected to ripple through the entire US financial regulatory system.