In a landmark decision, the U.S. Securities and Exchange Commission (SEC) has agreed in principle to dismiss its lawsuit against Coinbase, the largest cryptocurrency exchange in the United States. This move concludes a protracted legal battle that began in 2023 and marks a significant change in the regulatory landscape for digital assets.
The lawsuit, initiated under former SEC Chair Gary Gensler, accused Coinbase of operating as an unregistered securities exchange, broker, and clearing agency. The SEC alleged that Coinbase facilitated trading of at least 13 crypto tokens that should have been registered as securities and challenged the company’s staking program, which offers rewards to users who pool their assets to validate blockchain transactions.
However, with the inauguration of President Donald Trump and the appointment of crypto-friendly officials, including new SEC Chair Paul Atkins, the agency has swiftly reoriented its approach to cryptocurrency regulation. The SEC has established a dedicated task force to reassess its policies and has rescinded key crypto-related accounting guidelines.
Coinbase’s Chief Legal Officer, Paul Grewal, expressed optimism about the development, stating, “The war against crypto, at least as it applies to Coinbase, is over.” The exchange announced that SEC staff have “agreed in principle” to dismiss the case, pending a formal vote by the commission.
This decision is part of a broader trend of the SEC reevaluating its stance on cryptocurrency enforcement. The agency has paused its lawsuit against rival exchange Binance and is expected to revisit other pending cases against crypto firms, particularly those involving alleged regulatory violations without claims of investor fraud.
Industry analysts view the SEC’s shift as a positive development for the cryptocurrency sector. Piper Sandler analysts noted that the dismissal of the case “removes a significant overhang that we believe has kept some investors on the sidelines for nearly two years.”
Despite the favorable outcome for Coinbase, some advocacy groups have criticized the SEC’s decision. Dennis Kelleher, president and CEO of Better Markets, described the move as “a historic mistake,” arguing that the agency is now “favoring the crypto industry and fearing billionaire crypto kingpins who are publicly belittling the agency.”
Under former Chair Gensler, the SEC had intensified its scrutiny of the crypto industry, likening it to the “wild west” and targeting not only fraudulent actors but also major platforms like Coinbase. The enforcement unit dedicated to crypto was expanded during his tenure.
The current SEC leadership, including Acting Chair Mark Uyeda and Commissioner Hester Peirce, has advocated for the development of new, crypto-specific regulations rather than pursuing litigation. Peirce, often referred to as “crypto mom” within the industry, is spearheading efforts to overhaul the agency’s policies, with the new task force having convened multiple meetings to discuss potential changes.
The Trump administration has demonstrated a commitment to supporting the growth of the cryptocurrency sector. In his first week in office, President Trump established a cryptocurrency working group tasked with proposing new regulations and exploring the creation of a national cryptocurrency reserve.
Additionally, an executive order was issued to ensure that banking services for crypto companies are protected, addressing industry concerns that regulators had previously discouraged banks from engaging with crypto businesses.
As the SEC moves to dismiss its lawsuit against Coinbase, the cryptocurrency industry anticipates a more collaborative relationship with regulators. Grewal emphasized the positive rapport with the new SEC leadership, stating, “We have a very positive, productive relationship with this new SEC and are working arm in arm to get this addressed.”
This pivotal moment suggests a more favorable regulatory environment for digital assets in the United States, potentially paving the way for increased innovation and adoption within the crypto space.
