SEC Chair Gary Gensler will step down Jan. 20, make way for Trump 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.
• In addition to Gensler's soon-to-be vacant seat, the terms of two of the other four SEC commissioners expire in either 2024 or 2025.
• The SEC has also been at odds with Tesla CEO and Trump backer Elon Musk in recent years.

Securities and Exchange Commission Chair Gary Gensler will resign on Jan. 20, the agency announced Thursday, paving the way for President-elect Donald Trump to immediately select 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 pick to lead the SEC, but the expectation is that the next chair will be friendlier to Wall Street and crypto.

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

"The staff and the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation, and ensuring that the markets work for investors and issuers alike," Gensler said in a press release. "The staff comprises true public servants. It has been an honor of a lifetime to serve with them on behalf of everyday 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 advisors for investors. Those new areas included risk around climate change and cybersecurity. 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 fight with Grayscale to block bitcoin ETFs. Grayscale won in court, and billions of dollars have flowed into those new funds since they launched in January. The SEC sued several large digital asset companies in recent years over how they were handling or selling crypto, including Coinbase, with mixed results.

The SEC has also been at odds with 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 that probe.

Under Gensler, the SEC has investigated whether Musk is in compliance 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 with 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 have 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 beyond the end of their term. Presidential appointments to the SEC are subject to Senate ratification.

— CNBC's Lora Kolodny contributed reporting.