SEC Reverses Course on Case Against Coinbase as US Softens Crypto Regulation ⋅ Crypto World Echo

US regulators seem to be softening their stance oncryptocurrency under Trump’s pro-crypto administration. The Securities andExchange Commission (SEC) just agreed to dismiss its lawsuit against Coinbase. This development, announced by the exchange, marks asignificant victory for the exchange, after heightened scrutiny in the previousadministration.

“SEC staff has agreed in principle to dismiss itsunlawful enforcement case against Coinbase, subject to Commissioner approval—righting a major wrong. We’ve always maintained that we were right on the factsand the law, and today’s announcement confirms that this case should never havebeen filed in the first place,” the exchange announced today (Friday).

A Long and Costly Legal Battle

The lawsuit, which accused Coinbase of operating as anunregistered securities broker, has been a focal point in the broaderregulatory battle between crypto firms and US authorities.

The SEC’s lawsuit against Coinbase, filed in June2023, was part of a broader crackdown on the cryptocurrency industry. Theagency sought to categorize many crypto firms and their services assecurities-related businesses requiring registration.

Coinbase CEO Brian Armstrong emphasized thesignificance of the SEC’s reversal, stating, “If this goes through, it’s areally big deal, not just for us, but for the whole crypto industry. The 50million Americans who hold crypto, and I think for the rest of the worldbecause this is an important signal about where things are going.”

https://t.co/0iY0E7Mc9qpic.twitter.com/hVsGpnpNZd

— Brian Armstrong (@brian_armstrong) February 21, 2025

Coinbase, which went public in April 2021 after SECapproval, argued that its business model had remained unchanged and that thelawsuit was unjustified.

Coinbase has long maintained that the SEC’s case wasunjustified and politically motivated. “What changed over those two years wasthe political leadership at the SEC,” Coinbase stated. “In its war againstcrypto, it acted as if it was above the law, usurping the power of Congress asset forth in the Constitution.”

The exchange criticized the SEC’s approach, arguingthat regulatory uncertainty has stifled innovation and placed unnecessaryfinancial burdens on companies operating in the space. Millions in legal costs,extensive employee hours, and years of litigation have shaped this battle,underscoring the need for clearer legislative frameworks.

The latest announcement seems to have boosted the prices of several cryptocurrencies. At the time of publication, Bitcoin was nearing 100k, trading at $98,674, representing a 1% and 1.3% increase in the past day and week, according to CoinMarketCap. Early this year, a federal appeals court ruled in favor of Coinbase, faulting the SEC over its refusal to establish clear regulations for cryptocurrency.

A Win for the Industry

While the lawsuit’s dismissal is a significant win forCoinbase, its broader impact on the industry is even more notable. The companybelieves this outcome reinforces the need for long-term legislative clarity toensure the US remains competitive in the global crypto economy.

🇺🇸 JUST IN: The Third Circuit Court of Appeals found the SEC’s rejection of Coinbase’s request for clearer crypto rules to be unfair and poorly explained. The court sent the case back to the SEC for a better explanation but did not force the agency to start creating new rules… pic.twitter.com/PaSMnhi5hW

— Cointelegraph (@Cointelegraph) January 13, 2025

Coinbase emphasized that regulatory clarity couldattract new capital inflows, modernize financial systems, and lower consumerfees. The company envisions a future where “the majority of global GDP runs oncrypto rails” and argues that the US must take proactive steps to embrace thistransformation rather than being left behind.

With the SEC’s lawsuit likely ending,attention now turns to potential legislative action. Coinbase has called forCongress to establish clear guidelines to prevent future regulatory overreachand provide certainty for businesses and investors alike.

This article was written by Jared Kirui at www.financemagnates.com.