“A Great Day For Crypto” – SEC Set To Drop Enforcement Case Against Coinbase

In the latest reversal of the cantankerous policies of former United States Securities and Exchange Commission Chair Gary Gensler – who officials in the crypto industry complained had sought to regulate the industry to death through enforcement actions – the SEC has agreed to dismiss the lawsuit against centralized exchange firm Coinbase, accusing the company of operating as an unregistered securities broker.

According to an announcement from Coinbase, the lawsuit dismissal is still subject to approval by an SEC commissioner before it is officially withdrawn.

Dismissing the Coinbase lawsuit still requires a commission vote. The company expects that to happen next week, Paul Grewal, Coinbase’s chief legal officer said.

Now the US can finally get back to doing what it does best: building innovative tech that improves the world. https://t.co/jl43dIxBAj 4/4

— paulgrewal.eth (@iampaulgrewal) February 21, 2025

Coinbase CEO Brian Armstrong said:

“If this goes through, it’s a really big deal, not just for us, but for the whole crypto industry. The 50 million Americans who hold crypto, and I think for the rest of the world because this is an important signal about where things are going.”

BREAKING: @brian_armstrong announces that the SEC agrees to dismiss their litigation against @coinbase pic.twitter.com/cy792E6Bkl

— CryptosRus (@CryptosR_Us) February 21, 2025

The SEC sued Coinbase in June 2023 amid a torrent of litigation against the crypto industry, attempting to frame many firms and projects as either unregistered securities brokers or securities in and of themselves — placing heavy regulatory and financial pressure on the industry.

The Wall Street Journal reports that Acting SEC Chairman Mark Uyeda said Thursday that the unit would have a broader remit and “deploy enforcement resources judiciously,” including investigating fraud involving crypto assets. The Coinbase lawsuit didn’t involve any fraud claims.

Uyeda said last month that a new SEC task force is considering how to move away from Gensler’s approach toward the crypto market.

COIN share price is up around 5% in the pre-market…

Last week, the SEC filed a request to put a similar case against Binance on hold, citing the pending development of a regulatory framework for digital assets under President Donald Trump’s crypto-friendly administration.

“It’s a great day for Coinbase and for crypto,” said Grewal.

“We were committed to defending it [the lawsuit] to the gates of hell, for as long as it took and for as much money as it took.”

Bitcoin prices jumped back above $99,000 on the headlines but are giving some of that back…

The SEC complaint will be dismissed with prejudice, which means the agency can’t refile it, Coinbase said in a statement. 

Paul Atkins, the pro-crypto advocate nominated by Trump to head the SEC, hasn’t been confirmed yet.

Goldman Sachs crypto team has noted a sentiment shift across the crypto-market following the US presidential elections, as the new administration signaled its support for the industry. 

Here is a summary of the key headlines:

• Cryptocurrency working group: Trump ordered the creation of a cryptocurrency working group tasked with proposing new digital assets regulation and exploring the creation of a national cryptocurrency stockpile. It will also look to promote the ability of the public to use public blockchains and promote the US dollar through the support for dollar-backed stablecoins globally. The working group will be chaired by the White House AI & Crypto “czar” David Sacks, and include the Secretary of the Treasury, Attorney General, Secretary of Commerce, Chairs of the SEC & CFTC, and heads of other relevant agencies and departments. As next step, the working group is expected to publish recommendations. Its first priority will be working with Congress on stablecoin legislation, as indicated recently by Sacks.

• National strategic reserve: We are yet to see any commitment towards a strategic national reserve that would have exposure to cryptocurrencies. In the meantime, a number of US states (eight) are at various stages as proposing legislation for crypto reserves, and Trump has ordered the establishment of a sovereign wealth fund, although this is seen as separate from the idea of a strategic reserve.

• New leadership appointments across agencies: Paul Atkins, known to be supportive for innovation in capital markets, was named the nominee for Chairman of the SEC. Mark Uyeda was appointed as the acting Chairman of the SEC and has set up the new SEC Crypto task force. Caroline Pham was picked as the Acting CFTC Chair, and has since ordered the launch of public roundtables on evolving trends in market structure, including issues such as affiliated entities and conflicts of interest, prediction markets, and digital assets. Subsequently, Brian Quintez (currently the head of policy at a16zcrypto) was nominated to chair the CFTC. Jonathan Gould, a one-time Chief Legal Officer of Bitfury, was nominated to run the Office of the Comptroller of the Currency. Wyoming Senator Cynthia Lummis  was named as the chair of the Senate Banking Subcommittee on Digital Assets. Lummis has been historically vocal on the digital asset industry and has since the appointment introduced bipartisan stablecoin legislation.

• SEC crypto task force: The new SEC leadership announced the creation of a new task force (Crypto 2.0) that will be dedicated to helping the SEC draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously. Spearheaded by the SEC Commissioner Hester Pierce, who has been a long-time advocate for bringing more regulatory clarity to the space, the task force announced key high-level areas that it will be targeting, including the possible update to the special purpose broker dealer position and providing more clarity for crypto ETF issuers and the application process.

• SAB 121 revoked: The SEC has issued SAB 122 that rescinds the interpretative guidance SAB 121. SAB 121 was issued in 2022 and forced public companies to account for custodied digital assets on balance sheet (and thus was highly punitive to banks due to our capital treatment of on balance sheet assets). The revocation is the first step in allowing banks to custody and engage directly with digital assets, subject to additional regulatory guidance to come from other banking and markets regulators.

• Banks and crypto: Fed Chair Powell confirmed that banks can serve crypto clients as long as they can manage the risk, although banks continue to ask for additional clarity from the Fed.

While the new US administration has sent a strong signal on its commitment towards reshaping the digital asset industry, these announcements have yet to materialize into the necessary policy implementation.