SEC chair Gary Gensler's position in jeopardy as new legislation calls for his firing

• US Congressman Warren Davidson to introduce legislation to fire SEC's Gary Gensler
• Davidson also stated that former SEC chairs are ineligible; the new legislation will correct a long series of abuses.
• Davidson responded to Coinbase's CLO Paul Grewal's tweet about Gensler's intention to revisit the proposed redefinition of an exchange.

While the United States Securities and Exchange Commission (SEC) and its Chair Gary Gensler have made a name progressing scrutiny in the crypto arena, things appear to be taking a different turn for Gensler. In a recent update, the SEC Chair's position appears to be under threat following new legislation that United States Representative Warren Davidson will propose.

In a recent tweet, Davidson noted that he is introducing new legislation to unseat the chair of the SEC and replace the role with an executive director who will report to the board.

Former SEC chairs are ineligible, Davidson

Further, Davidson noted that the financial regulatory body's former chairpersons were ineligible. His comments were in response to a tweet by Coinbase chief legal officer Paul Grewal, where he addressed Gensler's intention to revisit the proposed redefinition of an exchange. 

In a meeting last week, the SEC chair indicated that the proposed amendments would be value-adding to investors and the market at large. He said this would be achievable upon subjecting some brokers to more regulatory scrutiny. In Gensler's opinion, the definition of an exchange would be revised and changed to fit more contemporary standards.

Davidson also noted that former chairs of the financial regulatory body are ineligible, adding that the legislation to be introduced would correct a long series of abuses.

SEC asserts that DeFi falls under securities rules

In a different but related development, the SEC has spoken frankly, asserting that decentralized finance (DeFi) falls under securities rules. 

The assertion underscores Gensler’s customary message that:

Crypto belongs in the securities world and will be regulated that way.

It comes after prolonged requests from the crypto industry for clarity on rules or guidance from the regulatory body to give digital asset businesses certainty on how to comply with regulation. The SEC’s resolve to sternly fold DeFi into its proposal for a new exchange definition further emphasizes that the cryptocurrency financial movement will not receive custom regulations.

Instead, the SEC is structuring intentional alterations to its rules to ascertain that crypto will be held to current securities regulations. Citing SEC Commissioner Hester Peirce:

If you don't look exactly like incumbent firms, then we're just going to be fine with killing you off or driving you offshore or forcing you to turn yourself into a centralized entity.

Hester’s comments came after the agency voted 3-2 to reopen an existing proposal to expand its definition of operations requiring regulation as securities. Notably, the move is intended to incorporate new technologies that would now include DeFi. To adhere to this, among other initiatives by the SEC, cryptocurrency operations would have to make a choice to embrace intrinsic changes like increasing centralization. Part of these adjustments could be a threat to what distinguishes their approach towards money and investment.

Crypto lawyer Jason Gottlieb has since opined, “The SEC is simply seeking to ban DeFi protocols in America,” a move that has driven the regulator to substitute “Its own opinions for Congress' prerogative on a major question, central to the future of the American economy." He added:

[The change]would sweep decentralized software protocols into a regulatory framework that was not built for them, and with which they literally, technologically cannot comply.

Still, Gensler sticks to his old adage that “investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets.”

 Also Read: SEC targets DeFi in vote to alter proposal concerning ‘exchange’ definition.