Gary Gensler is leaving the SEC, but replacement will face scrutiny

On Nov. 22, United States Securities and Exchange Commission (SEC) Chair Gery Gensler announced that he will step down from his position on Jan. 20.

He is widely regarded as one of the most “anti-crypto” SEC chairs in history, and crypto users are celebrating his departure on X.

However, the new pick for SEC Chair will face scrutiny in the US Senate, which must confirm any nominee.

The SEC announced Gensler’s departure in a press release. During his term in office, the SEC filed lawsuits against several popular Web3 protocols and exchanges, including Coinbase, Uniswap, Metamask developer Consensys, blockchain video streaming platform LBRY, and others. The lawsuits have been criticized by many crypto users and investors.

One of President Elect Donald Trump’s promises during his campaign was to fire Gary Gensler on his first day in office.

However, attempting to fire him could have led to a court battle, since members of regulatory agencies can only be removed “for cause.” Gensler’s resignation means that this battle will not take place.

Crypto X celebrates

Crypto users celebrated the announcement on the X social media platform.

Jeremy Hogan, an attorney and content creator who often posts about crypto-related legal proceedings, stated “Ding Dong, Gensler is Gone,” and asked readers to “Sing it with me” to the tune of “The Witch is Dead” from the Wizard of Oz.

Decentralized finance (DeFi) enthusiast KatieePCrypto posted an AI-generated video of Donald Trump firing Gensler and Gensler crying in response. The video was widely shared by pro-crypto channels.

Trump nominee not forthcoming

Trump has not yet announced who he will pick to replace Gensler. But speculation has centered around a few possible picks. 

A Reuters report suggested Commodities and Futures Exchange Commission Chair Summer Mersinger.

She has argued that the SEC should make rules for crypto protocols instead of filing lawsuits against them.

Predictions platform Kashi is predicting a 33% chance of former Binance US CEO Brian Brooks being given the job and a 32% chance that it will go to former SEC commissioner Paul Atkins. These two candidates are receiving the most bets out of any on the platform.

Related: Trump mulls tapping crypto-friendly CFTC chair: Report

Former CFTC chair Chris Giancarlo has denied that he will accept the position, stating that he already “cleaned up the mess” that Gensler left the last time Gensler was in office and that he doesn’t want to do so again.

Nominee may face uphill battle

Whoever Trump nominates, they may face intense scrutiny in the US Senate, which must confirm all commission members.

Trump has stated that he will attempt to bypass some confirmations through recess appointments. However, this would require Congress to vote to adjourn, which they may not be willing to do except for non-controversial nominees.

A report from Financial Times suggested that several congress members from Trump’s own party are deeply skeptical of at least some of his picks, including those of Attorney General nominee Matt Gaetz, who recently withdrew, and Health and Human Services Secretary nominee Robert F. Kennedy, Jr.

If Trump chooses a nominee for the position that is seen as weak at enforcing securities laws against crypto companies, they may fail to be confirmed by the Senate, leading to a “tougher” candidate being chosen instead.

Crypto lawsuits may be settled… eventually

Even if a strongly pro-crypto nominee gets confirmed, it won’t necessarily lead to the lawsuits against Coinbase, Uniswap, Consensys and others being dropped right away.

The new chair only represents one vote on the commission, and commission members may be reluctant to drop lawsuits that are already ongoing, as doing so might make the commission look like it’s being political.

Even so, some experts have stated that they believe the lawsuits will eventually be settled instead of going to trial.

For example, Katrina Paglia, chief legal officer for Pantera Capital, argued that the SEC will likely settle with defendants after allowing them to make “neither admit nor deny” statements and paying some fines, adding that the lawsuits will likely “quietly go away.”