Another SEC Democrat to Drop Out, Leaving Republicans Running Agency by February

Another Democratic commissioner on the Securities and Exchange Commission is following Chair Gary Gensler out the door in January, leaving the agency with a Republican majority as it weighs a likely course shift under the new administration of President-elect Donald Trump.

Commissioner Jaime Lizárraga is leaving January 17, he said in a Friday statement, which could give Republicans a head start on what could otherwise have been months of delay in redirecting the regulator’s policies — including on cryptocurrency. At this point, Caroline Crenshaw will be the sole Democrat on the five-member commission going into 2025, and her term has already expired, putting her into an extension that can last as long as about 18 months.

Lizárraga said he’s leaving because his wife has been suffering with a serious illness.

“In reflecting on the challenges that lie ahead, we have decided that it is in the best interests of our family to close this chapter in my 34-year public service journey,” he said in the statement.

The commission has been led in recent years by Gensler, who announced this week that he’d be resigning when Trump is sworn in on January 20. Under Gensler’s leadership, the commission had maintained an aggressive campaign of enforcement against crypto companies, arguing that digital assets platforms such as Coinbase Inc. (COIN) and Binance are operating as unregistered securities exchanges and that many of the tokens transacted on their platforms are securities.

A wide array of enforcement actions have been based on that stance, and they’ve developed into federal court cases in which the industry has countered the agency’s arguments on tokens as securities. That’s the situation that will be inherited by the new commission.

If Trump appoints one of the sitting Republican commissioners as an acting chair — widely expected to be Mark Uyeda — that new commission chief can begin shifting policy priorities and the agency’s legal stance on crypto. With a two-member majority alongside Commissioner Hester Peirce, the two Republicans will be running the agency’s agenda while the rest of the commission is filled out by Trump’s nominations.

Gensler said on Friday that Lizárraga “has been steadfastly focused on elevating the interest of everyday Americans.”

“At the SEC, he has been an excellent partner in our work to protect investors, facilitate capital formation, and ensure markets work for investors and issuers alike,” Gensler said in a statement.