Trump says he would fire SEC Chair Gary Gensler on Day One. It's not that easy

(Credit: David Becker—Getty Images)

At the recent Bitcoin 2024 conference, former President Donald Trump made headlines with his promises to "make Bitcoin great again" by ensuring the federal government HODLs bitcoin and fires Securities and Exchange Commission Chair Gary Gensler on day one. The crowd lapped it up. The reality, though, is that politicians often make sweeping promises to secure campaign contributions and votes—but, when it comes to firing Gensler on day one, that's a promise that Trump cannot keep.

Here's why. While many in the blockchain world would find it deeply satisfying to see the crypto-hating Gensler tossed from his job on Trump's first day in office, there are a series of obstacles that make that impossible.

For starters, the SEC is an independent federal agency, and its commissioners, including the chair, enjoy certain protections from arbitrary removal to maintain the agency's independence from political influence. Therefore, the President does not have the authority to remove the SEC chair without cause. This protection ensures that the regulatory actions and decisions of the SEC are based on law and policy considerations rather than political pressures.

If you want to get into the legal weeds, there are both acts of Congress and legal rulings setting all this out—notably the landmark 1935 Supreme Court case Humphrey's Executor v. United States that limit the President's ability to remove commissioners of independent agencies without cause.

There are also political considerations. While the President appoints the SEC chair with the advice and consent of the Senate, removal typically does not require Senate approval. Nonetheless, Congress would likely regard any move by Trump to abruptly throw Gensler out on his ear as a dangerous precedent and push back strongly.

This doesn't mean, of course, that there is no way for the President to remove an agency head like Gensler if there are legitimate reasons to do so. The catch is that there is a specific process for firing an official "for cause"—and that process entails more than Trump, as he did during the time of his reality TV show The Apprentice, simply bellowing "You're fired!"

First, the President must justify the decision to remove an agency official on the basis of something like inefficiency, neglect of duty, or malfeasance in office. If Trump can point to such behavior, this would be the first step in giving Gensler the boot—otherwise, the SEC chair could ask a federal judge to reinstate him under the process known as judicial review.

That said, there is no shortage of people making the case that Gensler is not doing his job and that there are legitimate grounds to fire him. These include not only notable crypto industry figures but senior politicians. Senator Warren Davidson (R-Ohio), for instance, has repeatedly called for Gensler to resign in part due to the SEC's legal struggles, such as its big setback in the Ripple case, as well as the decision by a federal judge in Utah to sanction the agency's lawyers for lying to the court in a crypto case.

If such behavior does meet the standards to remove Gensler "for cause," then Trump could indeed go about seeking to remove him on his first day. But the process for removal is not something that can happen in a single day. Here is the sequence of steps set out by law, and how a push to remove Gensler would play out:

1. Initial intent and announcement (1 day): The President announces the intention to remove Gary Gensler.
2. Establishing cause (1–3 months): An investigation is conducted to gather evidence of inefficiency, neglect of duty, or malfeasance.
3. Providing notice and opportunity to respond (2–3 weeks): Formal notice is given to Gensler, who is then provided with a period to respond.
4. Review and decision (1–2 months): An internal review and potentially a hearing are conducted, leading to a decision on the removal.
5. Legal challenges and judicial review (6–18 months): If contested, the case goes through the judicial system, potentially reaching higher courts.
6. Administrative transition (immediate to 1 month): An interim chair is appointed, and the transition is managed.

Bottom line? The removal process could outlast a commissioner's five-year term. Although the idea of immediately ousting the SEC chair might appeal to some voters, the reality is far more intricate and prolonged. Legal safeguards and due process are in place to ensure that the SEC's regulatory actions remain unbiased and grounded in legal and policy considerations, shielding them from undue political influence. Therefore, unless there's a resignation on day one, a Gensler departure will be anything but swift.

Tonya M. Evans is a Penn State Dickinson Law professor and author of Digital Money Demystified, host of the Tech Intersect podcast and founder/CEO of Advantage Evans FinTech Academy & Consulting. Follow her on X @IPProfEvans and visit her website at ProfTonyaEvans.com.