The U.S. Securities and Exchange Commission (SEC) is on the verge of formally dismissing its long-standing lawsuit against Coinbase, signaling a major shift in the agency’s approach to crypto regulation. Coinbase confirmed today that it has reached an “agreement in principle” with the SEC to drop the case with prejudice, ensuring the lawsuit cannot be refiled. The decision now awaits final approval from the two current SEC commissioners, acting chair Mark Uyeda and Hester Peirce—both known for their pro-market stances.
In a blog post and regulatory filing, Coinbase expressed confidence in its legal standing, stating that the case should never have been filed in the first place. Paul Grewal, Coinbase’s Chief Legal Officer, called the dismissal a victory for the entire cryptocurrency industry, emphasizing its significance for the millions Americans who have invested in digital assets.
“While dismissal will be a major win for the rule of law — and a clear vindication of our position — most of all it will be a win for the entire industry and the 52 million Americans who have owned a digital asset,” Grewal stated.
The move to drop the case highlights an evolving regulatory environment, where the SEC appears to be stepping back from its aggressive stance on crypto enforcement. This shift comes amid broader changes within the agency, including a transition in leadership and a growing recognition of the need for clearer, more supportive crypto regulations.
Background of the Lawsuit
The U.S. Securities and Exchange Commission (SEC) filed its lawsuit against Coinbase in June 2023, just two years after the crypto exchange went public. The SEC accused Coinbase of violating U.S. securities laws by operating as an unregistered broker, exchange, and clearing agency—three roles traditionally separated in regulated securities markets. According to the agency, Coinbase bypassed critical registration requirements, effectively evading the disclosure obligations designed to protect investors.
Central to the SEC’s allegations was Coinbase’s facilitation of trading in tokens the agency classified as unregistered securities. The list included major cryptocurrencies like Solana (SOL), Cardano (ADA), Polygon (MATIC), Filecoin (FIL), Sandbox (SAND), Axie Infinity (AXS), NEAR Protocol (NEAR), and Dash (DASH). These tokens, the SEC argued, should have been registered before being offered to investors through Coinbase’s platform.
Changing Leadership and a New Direction for Crypto Regulation
The decision to dismiss the lawsuit against Coinbase comes amid a significant shift in leadership and regulatory priorities at the SEC. Former Chair Gary Gensler, known for his hardline stance on cryptocurrencies, stepped down in January following the inauguration of pro-crypto President Donald Trump. Gensler’s tenure was marked by an aggressive “regulation-by-enforcement” approach, which many in the industry criticized for creating uncertainty and stifling innovation.
In a notable pivot, President Trump nominated Paul Atkins, a crypto-friendly former regulator, to lead the SEC. While awaiting Senate confirmation, Atkins has already signaled a more collaborative approach to crypto regulation. Under the interim leadership of acting chair Mark Uyeda and Commissioner Hester Peirce—both known for their market-friendly views—the agency appears to be stepping back from its aggressive enforcement tactics.
Further emphasizing this shift, the SEC recently established a dedicated crypto task force, led by Commissioner Peirce. The task force aims to develop a clearer, more structured regulatory framework for digital assets, marking a departure from the ambiguous and often punitive policies of the previous administration. This change reflects growing recognition within the SEC of the need for balanced oversight that protects investors without stifling innovation in the rapidly evolving crypto industry.
Quick Facts:
- Coinbase revealed on Friday that the SEC is expected to drop it’s lawsuit against the top exchange.
- The SEC sued Coinbase in June 2023 for allegedly operating without proper registration.
- Under the Trump administration, the SEC is adopting a more lenient approach toward crypto regulation.
- The dismissal is expected to provide clearer regulatory guidelines, encouraging innovation in the crypto space.
