SEC Signals That It Will Drop Lawsuit Against Coinbase

Source Beincrypto

The SEC signaled that it’s willing to drop its lawsuit against Coinbase, asking for 30 days to review the exchange’s appeals. It paused a lawsuit against Binance earlier this week, showing a clear end to Gary Gensler’s crypto crackdown.

This aligns with a broader shift toward a more lenient regulatory approach to crypto. If there is no argument that crypto exchanges must comply with traditional regulations, the industry will need to work fast to make its own rulebook.

SEC To Drop Coinbase Lawsuit

The SEC’s lawsuit against Coinbase was one of the largest crypto enforcement actions of Gary Gensler’s tenure as Chair. In 2023, the Commission filed a suit against Coinbase, claiming that crypto exchanges like it would have to comply with the same regulations as stock exchanges and brokerages. Now, according to the Wall Street Journal, it’s all about to end.

“We expect Coinbase’s existing litigation with the SEC to be wholly or partially rescinded,” said Matthew Sigel, VanEck’s Head of Digital Research, quoting a representative from Citigroup.

Coinbase, one of the world’s leading crypto exchanges, tried a wide variety of tactics in its fight with the SEC. It moved to appeal, filed countersuits against the Commission, and more before it found the winning strategy. The exchange began leaning on the crypto industry’s Congressional allies, casting this fight as central to the future of American crypto.

If Coinbase defeated the SEC here, it’d be able to help craft legislation tailor-made for the crypto industry. To this end, it made major contributions to Fairshake, the pro-crypto Super PAC, and CEO Brian Armstrong forged personal connections with President Trump. Since Trump’s victory, the pieces have fallen into place.

As the start of Trump’s second term approached, Coinbase began scoring major court wins against the SEC. Earlier this month, its CLO testified before Congress on a largely unrelated matter, and its Shareholder Letter explicitly described its massive gains with the regulatory apparatus. Thanks to this development, the future appears to be wide open.

Technically, the SEC hasn’t dropped the Coinbase lawsuit yet. It merely claimed it “could facilitate the potential resolution” of the legal battle, asking for 30 days to review the exchange’s appeal. Nonetheless, it seems very likely that the Commission will drop these charges, as it paused a suit against Binance earlier this week.

The ball is now fully in Coinbase’s court. It will soon be freed from Gary Gensler’s crypto crackdown and well-positioned to craft positive regulations that work for the industry. There is no clear timeline for when this regulation may advance, but the momentum behind it is huge. Today, it’s indisputable: crypto is in its political ascendancy.

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