SEC Set to Dismiss Coinbase Lawsuit, Marking a Major Shift in Crypto Regulation

The U.S. Securities and Exchange Commission (SEC) is reportedly planning to dismiss its case against Coinbase, marking a significant change in the agency's stance toward regulating the cryptocurrency sector.

According to Brian Armstrong, Coinbase‘s CEO, the SEC staff has reachedan agreement to drop the lawsuit with prejudice, which would permanently conclude the regulator’s claims of securities violations. Armstrong celebrated the development, emphasizing that this outcome benefits not just Coinbase but the entire cryptocurrency industry in the U.S.

The lawsuit, initiated by the SEC, had accused Coinbase of operating as an unregistered broker, clearinghouse, and exchange, claiming that some of the digital assets listed on the platform met the criteria of securities under the Howey Test. If the SECs planned vote to end the case is approved, it could pave the way for other crypto firms facing similar regulatory challenges.

The SEC, under the leadership of Acting Chairman Mark Uyeda and Commissioner Hester Peirce, is moving toward a more supportive approach to cryptocurrency. Both Uyeda and Peirce have pushed for clearer and more favorable rules for digital assets, signaling a shift from previous positions that were often seen as hostile to the industry.

Recent actions from the SEC indicate this change in direction, including the withdrawal of a proposal to broaden the definition of crypto “sellers” and a move to refocus enforcement efforts away from crypto-specific cases toward emerging technologies. The SEC has also suspended its lawsuit against Binance, another major crypto exchange under investigation.

The upcoming vote by the SEC will be a key moment for the future of crypto regulation in the U.S., with the decision likely to face opposition from certain commissioners like Caroline Crenshaw, who has been critical of the industry. However, with Uyeda and Peirce supporting the move, the dismissal is anticipated to go ahead.