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SEC Drops Lawsuit Against Coinbase, Ending Legal Battle
The SEC has decided to withdraw its lawsuit against Coinbase, marking a major shift in crypto regulation under new leadership. Is this the end of the war on crypto?
ND
by News Desk
2025-02-21
SEC Drops Lawsuit Against Coinbase, Ending Legal Battle

The U.S. Securities and Exchange Commission (SEC) has announced its decision to withdraw the lawsuit against Coinbase (COIN.O), bringing an end to a legal battle that once threatened the future of the crypto exchange and the broader digital asset industry.

The move, revealed on Friday, reflects a major policy shift under the Republican leadership of the SEC, following President Donald Trump’s return to office. The agency has since taken steps to restructure its approach to cryptocurrency regulation, including the creation of a dedicated task force and the revocation of previous crypto-related accounting guidance.

SEC’s Crypto Policy Takes a New Direction

The decision to end litigation against Coinbase is one of the most significant actions under the acting SEC leadership. The regulator is now focused on working collaboratively with the crypto industry to establish a clearer regulatory framework.

The SEC previously sued both Coinbase and Binance in 2023, alleging that they operated in violation of securities laws. However, a court has now paused the lawsuit against Binance following a request from both the SEC and the company, citing the implications of the new task force.

Paul Grewal, Coinbase’s Chief Legal Officer, hailed the withdrawal as a turning point.

“The war against crypto, at least as it applies to Coinbase, is over,” he said in an interview.

The Legal Battle: Key Issues in the Lawsuit

The SEC’s original lawsuit against Coinbase centered on two main allegations:

  1. Unregistered Securities – The SEC accused Coinbase of allowing trading in at least 13 crypto tokens that the agency argued should have been registered as securities.
  2. Staking Program – The SEC also took issue with Coinbase’s staking service, which allows users to pool assets to verify blockchain activity and earn rewards. The regulator argued this service should have been registered under federal securities laws.

Coinbase, along with much of the crypto industry, has long maintained that digital assets do not meet the legal definition of securities. The company pointed to the Howey Test, a key legal precedent established by the U.S. Supreme Court, which determines whether an asset qualifies as a security based on whether it involves an investment in a common enterprise with the expectation of profit.

Crypto’s Future Under the New SEC Leadership

The withdrawal of the Coinbase lawsuit is part of a broader restructuring at the SEC. Acting Chair Mark Uyeda and Commissioner Hester Peirce, both Republicans, have criticized the previous administration’s aggressive legal stance on crypto. Instead, they are advocating for the creation of new, industry-specific regulations.

Coinbase has welcomed this change in tone.

“We have a very positive, productive relationship with this new SEC and are working lockstep with them, arm in arm, to get this addressed,” Grewal said.

What’s Next for Crypto Regulation?

With the SEC’s new task force in place, the agency is expected to engage with the crypto industry in shaping a more workable regulatory framework. While the legal battle with Coinbase has come to an end, it remains to be seen how future crypto-specific regulations will evolve.

This development signals a more cooperative approach between regulators and the industry, raising optimism among investors and businesses in the crypto space.
Tagged:

bitcoin

CryptoRegulation

Coinbase

SEC

Blockchain
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