Could Trump fire SEC Chair Gensler? Opinions differ, but he probably won’t need to, sources say.

Former President Donald Trump has said he would fire SEC Chair Gary Gensler if re-elected, leaving many to ponder whether Trump could actually remove Gensler from his post.

Trump’s pledge to fire Gensler came during a speech at a bitcoin conference in July, according to Bloomberg. The crypto industry has strongly criticized Gensler’s approach to regulating digital assets, often calling it a “regulation by enforcement” approach, given the agency’s enforcement actions against many crypto firms and exchanges, including Coinbase, Kraken, Genesis Global Capital and Gemini Trust Co.

But the question of whether a president could remove the chair of the SEC is an interesting one, since it’s never been put to the test; that’s because the chair typically steps down when they know a new president would like to replace them, sources said.

“There has not been a situation where someone has said, ‘No, I'm the chair and I'm going to stay for the remainder of my term, and you can't fire me,’” said Marc Elovitz, co-managing partner at Schulte Roth & Zabel.

Gensler’s term expires in 2026.

When a new party takes over the presidency, traditionally “the chair resigns right on or before inauguration hour,” said Andrew Vollmer, senior affiliated scholar with the Mercatus Center at George Mason University and former deputy general counsel of the SEC.

Jay Clayton, the former SEC chair under Trump, voluntarily ended his term on Dec. 23, 2020, when President Joe Biden was still the president-elect, while Mary Jo White, who served as chair under the Obama administration, served out her term until Jan. 20, 2017 — the same day as Trump’s inauguration.

If Gensler broke with tradition and decided he wanted to stay at the SEC for a future Trump presidency, opinions differ on what might ensue.

Vollmer contended in a July blog post that “the president may fire any SEC commissioner without needing a cause or a reason.”

In an interview, Vollmer said that “a part of the president's constitutional power is to fire what are called principal officers of the United States,” such as SEC commissioners.

Furthermore, “there is no statute that says that the president's power to fire an SEC commissioner is restricted,” Vollmer said, and absent a statute, he believes the president has the right to do so.

This differs from the Consumer Financial Protection Bureau, as its founding statute dictates that the president can only fire the CFPB director for inefficiency, malfeasance or neglect of duty. In 2020, the Supreme Court ruled that the president can fire the head of the CFPB at will, finding the restriction on the president's powers unconstitutional.

However, Elovitz said “it is a surprisingly complicated, nuanced and unsettled matter of law as to exactly whether the president can remove the chair of the SEC.” He added that the matter is uncertain because “it's not set out anywhere, and this issue has not come up in the past.”

It’s the president’s responsibility to designate one of the SEC’s five commissioners as chair, as stated plainly on the SEC’s website. Therefore, some have proposed that Trump could simply name one of the two Republican commissioners as chair and keep Gensler on as a commissioner, Elovitz noted.

Vollmer recognized that possibility in his blog post as well, writing, “without removing or appointing a commissioner, the president may transfer the position of chair from Gensler to a different commissioner.”

However, Elovitz pointed out that doing so would make Gensler “one of three Democratic-appointed commissioners,” still giving Democrats the majority vote, which would be “completely unacceptable” for a Republican-led administration.

“Either they get rid of (Gensler) or they don't,” Elovitz said. “And I can't imagine them not getting rid of him.”

Given criticism at both the industry and congressional level, it’s highly unlikely that Gensler would fight to stay at the SEC, Elovitz said.

Both Elovitz and Vollmer agreed that Gensler has been a particularly controversial leader of the SEC.

“I think (SEC) chairs get a huge amount of attention” and generally attract a good deal of scrutiny, Vollmer said, but “Gensler has come under much more fire” because of how he’s handled the job, Vollmer added, calling the chair a “regulatory zealot.”

“There is a lot of frustration with (Gensler) from the private funds industry,” according to Elovitz, who said the “asset management industry and private funds (industry), in particular, have just been really bombarded with this barrage of rule-making proposals that were really problematic.”

After facing significant pushback, the SEC said in its most recent regulatory agenda that it plans to reissue two proposed rules. One of those rules proposed requiring investment advisers and broker dealers to "eliminate or neutralize" conflicts of interest that arise from the use of certain technologies — including artificial intelligence — in investor interactions, while the other proposed implementing a swing pricing requirement for any open-end fund, other than a money market fund or ETF.

The agency is also facing a host of lawsuits, as industry groups and others have sued the SEC over several rules finalized in 2023, including the controversial climate disclosure rule. That rule, which the agency voluntarily halted in April, would require public companies to disclose an array of climate-related information in their periodic reports and registration statements.

When asked who they would like to see run the agency, a representative from a financial services trade association said, “I think we would like to see a chair who takes a more deliberate, analytical, data-driven approach to rule-making” but didn’t give any names.

Republican SEC Commissioners Hester Peirce and Mark Uyeda have both been floated as possible chairs under Trump, as both have been critical of Gensler’s leadership at the SEC.

At a September House hearing where all five commissioners testified, Peirce and Uyeda often agreed with Republicans’ concerns about the way Gensler runs the agency, especially when it comes to digital assets.

When asked about her concerns regarding the SEC’s approach to digital assets, Peirce responded, “I think the first problem is that we’ve used enforcement as our leading foot instead of using regulation,” suggesting several ways the agency could provide more clarity for the industry.

Uyeda also criticized Gensler on the issue, contending that the SEC “has a wide range of existing tools” it could use to address the ambiguity surrounding digital assets.

“It’s not surprising that the context in which Trump said (he would fire Gensler) related to digital assets because that has been a signature issue for Gensler,” according to Elovitz.

Both Elovitz and Vollmer said that Trump may consider either Peirce or Uyeda to chair the agency, but the former president’s decisions are unpredictable.

If Vice President Kamala Harris wins the election, it’s unclear if she would keep Gensler as the chair of the SEC. President Joe Biden appointed Gensler back in 2021, but Harris has started to signal her support for bolstering the crypto industry, of which Gensler has been a staunch critic.

“We will encourage innovative technologies like AI and digital assets, while protecting our consumers and investors,” Harris said at a Sept. 22 event in New York, according to vice presidential press pool reports.

The Harris campaign has also said in private settings that the vice president is “interested in hitting the reset button” on digital assets, Ripple Chief Legal Officer Stuart Alderoty said at Georgetown University on Sept. 17.

In a May interview with CNBC, Gensler indicated that he would continue to lead the SEC after the election if given the opportunity.

“This is a terrific job where we can actually help Americans, investors and issuers, for decades to come,” Gensler said in an interview with Andrew Ross Sorkin on CNBC’s “Squawk Box.” “So my term is well into 2026, and if I have the honor to continue to serve, I look forward to it.”