SEC Chairman Gary Gensler will step down on January 20, making way for Trump’s replacement

Securities and Exchange Commission Chairman Gary Gensler will step down on Jan. 20, the agency announced Thursday, clearing the way for President-elect Donald Trump to immediately choose a replacement.

Gensler took over the SEC in 2021, and under his leadership, the commission has taken an ambitious but controversial approach to several regulatory issues, including cryptocurrencies. Trump has not announced his choice to lead the SEC, but the expectation is that the next chair will be more friendly to Wall Street and crypto.

SEC commissioners serve five-year terms, so in theory Gensler could have stayed on until at least 2026. Instead, he is leaving the agency entirely, as was widely expected.

“The staff and the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation and ensuring markets work for both investors and issuers,” Gensler said in a news release. “The staff is made up of true public servants. It has been the honor of a lifetime to serve with them on behalf of ordinary Americans and ensure that our capital markets remain the best in the world.”

Under Gensler, the SEC pushed to require more disclosure from publicly traded companies and financial advisers to investors. These new areas included climate change risk and cyber security. The agency also sped up settlement times for stock trades to just one day, a change spurred in part by the meme stock trading frenzy in early 2021.

Gensler’s SEC has had several high-profile disputes with the crypto industry, including a legal battle with Grayscale to block bitcoin ETFs. Shades of Gray won in court, and billions of dollars have flowed into the new funds since they were launched in January. The SEC sued several major digital asset companies in recent years over how they handled or sold crypto, including Coin basewith mixed results.

The SEC has also been on edge Tesla CEO Elon Musk in recent years, including investigating him for potential fraud surrounding his $44 billion purchase of social media company Twitter, now known as X, in 2022. The agency is currently seeking sanctions against Musk after he skipped court-ordered testimony in this study.

Under Gensler, the SEC has been investigating whether Musk is complying with an earlier settlement agreement that required the billionaire CEO to have a securities lawyer review some of his social media posts about Tesla before sharing them.

Musk, who has been publicly critical of the SEC, campaigned alongside Trump, donated at least $130 million to his campaign and is set to work with the new administration as co-head of the so-called Department of Government Efficiency.

Trump could be given the opportunity to quickly reshape the SEC. In addition to Gensler’s soon-to-be vacant seat, the terms of two of the other four commissioners expire in either 2024 or 2025.

Commissioners can serve up to 18 months after the end of their term of office. Presidential appointments to the SEC are subject to Senate ratification.

— CNBC’s Lora Kolodny contributed reporting.