The Securities and Exchange Commission has preliminarily agreed to throw out its case against cryptocurrency behemoth Coinbase, according to the company, a big step toward slamming the door on the Wall Street regulator’s enforcement crusade against the $3 trillion market.
Agreement to Dismiss Lawsuit
Staff at the agency have agreed in principle to dismiss the lawsuit against Coinbase, the company said in a blog post Friday. The agreement is pending approval from the SEC’s three commissioners, who are expected to vote on the dismissal next week, according to Coinbase.
Legal Battle Conclusion
If approved, the deal would cap a nearly two-year-long legal battle between America’s largest crypto exchange and the SEC, which had been a marquee case in the federal government’s now-crumbling crackdown on crypto.
“Coinbase is committing to do nothing. We surrendered nothing,” said Coinbase Chief Legal Officer Paul Grewal, who called the outcome a “complete win.”
“The surrender was the SEC’s — and the SEC’s alone,” Grewal said.
The SEC declined to comment.
Case Background
Filed in the aftermath of Sam Bankman-Fried’s FTX collapse, the Coinbase case was widely seen to be the biggest legal fight in crypto. The SEC alleged that Coinbase was raking in billions of dollars by illegally running a securities exchange, broker, and clearing agency in the U.S. The company objected to the charges and vowed to take the case to the Supreme Court if need be.
Regulatory Environment Shift
Instead, the now Republican-controlled SEC is seemingly prepared to walk away from the case — in the clearest sign yet of how President Donald Trump’s financial regulators are paving the way to turn the U.S. into the “crypto capital” that Trump promised on the campaign trail.
“We’re entering into a very different phase where wars and campaigns are no longer how this SEC and the rest of the federal government” operate in crypto, Grewal said. “It’s long overdue that we have a conversation in this country about crypto and a discussion about the right way to protect everyone’s interests.”
Future of Crypto Regulation
Once a crypto skeptic, Trump has vowed to make the U.S. a friendlier regulatory environment for crypto after a bruising several years under the Biden administration. The president has regularly touted industry-favored proposals and even pushed his own business interests into the market, despite some concerns within the crypto world.
The SEC has long taken an aggressive enforcement approach to crypto, including during the first Trump administration. But the clampdown took on new speed under now-former Chair Gary Gensler, who called the market a “Wild West” that was filled with scammers and fraudsters. During his chairship, the SEC levied lawsuits against many of the market’s biggest players — and found success in the courts, including against Coinbase.
Regulatory Framework Discussions
Underpinning many of the cases was the SEC’s argument that a broad swath of crypto trading falls under the same investor-protection rules that apply to stock and bond trading in the U.S. Companies like Coinbase, as a result, need to be registered no differently from traditional financial firms, the agency said.
Crypto firms argued that the SEC’s rules weren’t fit for the market and that the agency, other regulators, and Congress needed to devise a new regulatory framework. And already, Trump’s Washington is leaning in.
Legislative Developments
Industry-friendly lawmakers, who were buoyed in last year’s elections by a rush of cash from crypto firms and executives, have vowed to enact crypto legislation this year. And the SEC, which is now led by Acting Chair Mark Uyeda, has already established a crypto task force dedicated to devising a new roadmap for firms looking to register with the agency. What’s more, in court filings, the agency has indicated that it is weighing pulling back or striking other settlements as well — citing the crypto task force’s work.
Trump’s Statement
“We ended that war totally,” Trump said of crypto while speaking in Miami on Wednesday. “That war is over.”
