As the most unprecedented week in modern American presidential history comes to a close, the cryptocurrency industry appears to be on the verge of an unexpected victory. President Joe Biden’s administration has faced widespread criticism for its hostility towards cryptocurrency, yet due to concerns over his age and cognitive abilities, Biden is now under immense pressure to withdraw from the 2024 presidential election.
However, if such a situation does indeed occur—if Biden withdraws from the race or even resigns from the presidency—will cryptocurrencies still be seen as an adversary by Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC)?
Gensler, widely considered to be the driving force behind the SEC’s aggressive pursuit of U.S. cryptocurrency exchanges, DeFi projects, and software developers in recent years, was nominated to lead the SEC by Biden in 2021. His five-year term is set to expire in 2026.
If Biden were to withdraw from the 2024 election or resign from the presidency, historical precedent and existing regulations suggest that a Democratic successor might force Gensler out of his leadership position, but the situation could quickly become complex.
The SEC is composed of five commissioners: three from one party—typically the president’s party—and two from the other party. Each commissioner is nominated by the president and must be confirmed by the U.S. Senate, with staggered five-year terms. For instance, like the Chief Justice of the Supreme Court, the SEC Chairman is directly nominated for the leadership role to replace the former Chairman.
In the 1930s, in response to President Franklin D. Roosevelt’s attempts to restructure the Federal Trade Commission (FTC), the Supreme Court ruled that the president could not remove any agency commissioner unless they demonstrated “inefficiency, neglect of duty, or malfeasance.”
However, it is crucial to note that a new president does have the authority to nominate an existing SEC commissioner to the role of SEC Chairman and to demote the current Chairman.
What does this mean for Gensler? Let’s consider the most extreme potential scenario: under increasing pressure from Democratic donors, voters, and colleagues, Biden might not only decide to halt his campaign for re-election next week but also choose to resign from the presidency.
In this theoretical scenario, Biden would be acting both to protect his legacy and to bolster the legitimacy of Vice President Kamala Harris as his successor. The cryptocurrency prediction market Polymarket currently lists Harris as the most likely Democratic candidate for president.
If Harris were to become acting president later this month, she would be unable to remove Gensler from the SEC without cause, and her willingness to do so is also in question.
Yet she could demote Gensler and promote one of the other two Democratic commissioners at the SEC to the role of Chairman.
Still, cryptocurrency advocates may not want to pop the champagne just yet. Historical precedent shows that successors rarely exercise such powers. For instance, after President John F. Kennedy’s assassination in 1963, Lyndon B. Johnson assumed the presidency and kept Kennedy’s SEC Chairman. Similarly, after Richard Nixon resigned over the Watergate scandal in 1974, Gerald Ford succeeded him without making changes to the SEC’s leadership.
Moreover, Gensler’s Democratic colleagues at the SEC might be even more antagonistic toward the cryptocurrency industry than he is, making the prospects for the crypto dream even slimmer.
In January of this year, when Gensler chose to approve a Bitcoin ETF, his Democratic colleague Caroline Crenshaw publicly opposed the decision, denouncing the cryptocurrency market as a “breeding ground for fraud.” Crenshaw’s term is also set to expire this year.
Another Democratic SEC commissioner, Jaime Lizárraga, previously served as a senior advisor to former Speaker of the House Nancy Pelosi. He echoes many of Gensler’s positions on cryptocurrency regulation, including the view that most digital asset tokens may be considered securities.
Ultimately, the historic turmoil currently affecting the Democratic Party may not immediately alter the composition of the SEC or the fate of the cryptocurrency industry. However, whoever takes the oath of office in January 2025—be it Biden, Harris, or former President Donald Trump—will find themselves in a pivotal position to shape the future status of cryptocurrency in the United States.
Andrew Hayward Editor