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Journalist
Hassan Shittu
Journalist
Hassan Shittu
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The United States Securities and Exchange Commission (SEC) has agreed to drop its enforcement case against Coinbase, pending approval from its commissioners.
This decision marks a major shift in regulatory attitudes toward the cryptocurrency industry under the new administration. It reverses years of legal battles initiated by former SEC Chair Gary Gensler.
Coinbase, the largest U.S.-based cryptocurrency exchange, was sued by the SEC in 2023 for operating as an unregistered securities exchange and failing to register its staking program properly.
The lawsuit, which threatened Coinbase’s business model and the broader crypto market since 2023, was one of the most significant regulatory actions taken against the industry.
A Turning Point for Crypto Regulation
With the potential dismissal of this case, the crypto sector is optimistic about regulatory clarity and a more favorable environment under the new SEC leadership.
Coinbase CEO Brian Armstrong celebrated the decision, calling it a “huge day” for the industry. He emphasized that the agreement to end the case indicates a turning point for cryptocurrency regulations in the U.S.
Armstrong also hoped that other enforcement actions against crypto firms would be reconsidered, leading to a more transparent and fair regulatory framework.
The SEC’s case against Coinbase was emblematic of the previous administration’s approach to cryptocurrency regulation, which relied heavily on enforcement actions.
Under Gensler’s leadership, the SEC pursued lawsuits against multiple crypto firms, including Binance and Kraken, arguing that most digital assets constituted unregistered securities.
This stance led to widespread uncertainty and regulatory pressure on the industry.
The shift in SEC policy comes as President Donald Trump, who took office last month, aims to ease regulatory burdens on the crypto sector.
His nominee for SEC chair, Paul Atkins, is known for his pro-crypto stance, which instantly signaled a potential departure from the aggressive enforcement actions seen under the previous administration.
While Atkins awaits confirmation, current acting SEC Chair Mark Uyeda has already taken steps to scale back the agency’s crypto enforcement unit. The most recent effort involved creating the Cyber and Emerging Technologies Unit (CETU) to combat crypto fraud.
Coinbase Chief Legal Officer Paul Grewal described the agreement as a “complete surrender” by the SEC, noting that the case will be dismissed with prejudice, preventing the agency from refiling similar charges in the future.
Grewal stated that this outcome sets a precedent for other ongoing cases, potentially leading to further dismissals and a broader regulatory shift favoring the crypto industry.
Political and Market Implications
The potential dismissal of the SEC’s case against Coinbase has far-reaching implications, both politically and financially.
The crypto industry played a significant role in supporting Trump’s campaign, with major investors and firms backing his pro-crypto stance.
Coinbase itself was one of the largest funders of Fairshake, a crypto-focused super PAC that contributed over $130 million to legislative candidates favoring blockchain-friendly policies.
Trump’s administration has already supported the industry, including appointing venture investor David Sacks as the White House’s “crypto and A.I. czar.”
Market reactions to the SEC’s decision have been overwhelmingly positive. Coinbase shares surged 4% in premarket trading, and Bitcoin also peaked near the rebounding target of $100K.
While the agreement to drop the case still requires formal approval from the SEC’s commissioners, industry experts view it as a formality.
If finalized, the decision will mark one of the most significant regulatory reversals in crypto history, setting the stage for a new era of cooperation between digital asset firms and U.S. regulators.
