Lawmakers introduce bill to remove SEC chair — but do they have the authority?

Members of the United States House of Representatives are attempting to find ways to oust SEC Chair Gary Gensler from his post, yet the legalities of doing so may be more complicated than simply passing one bill.

On June 12, Representative Warren Davidson of Ohio put forth the SEC Stabilization Act with the purpose of removing Gensler from his position as chair of the SEC. Gensler was sworn into office in April 2021 and his term was projected to last until 2026.

While Davidson leveled serious accusations of misconduct and misuse of authority against Gensler, dismissing a government agency official nominated by the U.S. President and approved by the Senate is not a trivial matter. For example, while Presidents may request a resignation from an SEC commissioner or employ subtle political pressure to do so, it is uncertain whether they possess the exclusive power to terminate one.

An attorney has allegedly asserted that it is necessary to have a valid reason for ousting an SEC representative. In 2010, the Supreme Court ruled that the President can only dismiss commissioners for specific reasons, such as “incompetence, neglect of duty, or malfeasance”.

Other officials, such as cabinet secretaries, are appointed by the president and can be removed from their position at any time. Although extremely rare, members of Congress can expel one of their colleagues with a two-thirds majority vote, a process that has only occurred 20 times in the United States’ entire history.

Gensler has been the subject of much criticism from cryptocurrency users and some legislators in the last week, due to the SEC’s filing of lawsuits against Binance and Coinbase for offering unregistered securities. These filings included several tokens the commission now considers to be unregistered securities, making the total number of cryptocurrencies subject to the SEC’s regulations about 68.

Lawyers allege that in 2019, SEC’s Gensler offered to act as a consultant to Binance.

In April, Davidson put forth the anti-Gensler legislation in reaction to a tweet from Coinbase’s Chief Legal Officer Paul Grewal. If approved into law, the SEC Stabilization Act could rearrange the commission to include a sixth member – the commission is now made up of four commissioners and one chair – as well as transfer certain power from the chair to the commissioners.

Cointelegraph attempted to contact the SEC, however, a representative declined to provide a statement.

Does SEC Chair Gary Gensler have the ultimate authority when it comes to crypto regulation?