SEC Drops Lawsuit Against Coinbase in Potential Shift Towards Legislative Regulation
The Securities and Exchange Commission (SEC) is set to drop its lawsuit against Coinbase, marking a major legal victory for the crypto industry against the US regulator. This decision, pending confirmation from the agency’s commissioners, would put an end to allegations that Coinbase operated as an unregistered exchange and listed unregistered securities.
“It’s a great day for Coinbase and crypto in America.”
According to Coinbase’s Chief Legal Officer, Paul Grewal, the negotiated agreement would prevent the SEC from reopening the case in the future.
The COIN stock immediately gained over 4% in pre-market trading.
A Strategic Retreat by SEC That Impacts the Entire Industry
The dropping of this case could have a ripple effect on other ongoing cases. Previously, under Gary Gensler’s leadership, the SEC had been aggressively pursuing the crypto industry, arguing that most tokens were securities subject to its regulation. Dropping the case against Coinbase sends a strong signal: the legal battle is giving way to the need for clear legislative frameworks.
In the US, the future of crypto regulation may now be determined in Congress rather than the courtroom. Coinbase, which has already made significant political investments through the Fairshake PAC, hopes to influence the creation of new laws regarding market structure and stablecoins.
The SEC commissioners have not yet responded to CoinAcademy’s questions.
A Changed SEC Under Uyeda’s Leadership
The SEC’s decision coincides with an internal overhaul. Acting Chair Mark Uyeda and Commissioner Hester Peirce, who are supportive of the crypto industry, appear to be turning the page on blanket enforcement actions. The agency recently restructured its enforcement unit, expanding its role to cover “emerging technologies” and reducing its focus on cryptocurrencies.
This shift has already been reflected in several decisions, including withdrawing an appeal regarding the definition of “dealers” under SEC surveillance, and requesting the suspension of the Binance case, which carried similar allegations to those against Coinbase but was also tainted with fraud suspicions.
With Paul Atkins, a former SEC commissioner and the future chairman pending Senate confirmation, the trend may continue. Atkins, a mentor to Peirce and Uyeda, is seen as an advocate for a more pragmatic approach to the crypto industry.
The End of an Era: Priority Shifts to Legislation
The SEC commissioners’ vote on dropping the Coinbase lawsuit will be closely watched by the industry. If confirmed, it will force the regulator to abandon other similar cases. Grewal stated, “We hope this case will serve as a model for resolving others.”
Now, attention turns to Congress, where new regulations could emerge within the first 100 days of the next legislative session. It’s time for Coinbase and the entire sector to shift from legal defense to political offense.
