SEC Drops Coinbase Lawsuit: A Win for Crypto in America

The U.S. Securities and Exchange Commission (SEC) is poised to drop its lawsuit against Coinbase, marking a significant moment for the U.S. cryptocurrency industry. According to Coinbase's top lawyer, the SEC will soon vote on a deal that would entirely dismiss the agency's legal pursuit of the crypto exchange. This move, if approved, would permanently shut down the SEC's accusations of securities violations against Coinbase.

Paul Grewal, Coinbase's Chief Legal Officer, expressed optimism about the pending vote, stating, "We have every expectation, based on representations that have been made to us, that [the approval] will come, and with that, the dismissal will then be filed." He further emphasized the broader implications of the deal, saying, "It's a great day for Coinbase, yes, but it's also a great day for crypto in America."

The SEC's initial pursuit of Coinbase sent a strong message to the industry, alleging that the exchange violated federal law by not registering as a clearing house, broker, or trading venue. Coinbase chose to fight the accusations in federal court, with a recent judge's decision siding with the company's effort to elevate an appeal of the central question at dispute: Are the tokens being traded really securities under the SEC's jurisdiction?

The industry had long anticipated a resolution through the courts, potentially even reaching the U.S. Supreme Court. However, the SEC's surrender in this dispute may now put the final word on the legal definition of crypto assets into the hands of Congress. This could shift the industry's focus from legal wrangling to lobbying for clear federal regulations.

The SEC's enforcement meetings typically take place on Thursdays, so the final decision on the staff recommendation may be delayed as long as a week. The commission is currently made up of Acting Chairman Mark Uyeda, Republican Commissioner Hester Peirce, and Democrat Commissioner Caroline Crenshaw. Crenshaw's stance on the digital assets industry and its compliance remains unclear, potentially impacting the final decision.

Uyeda and Peirce, who heads the agency's new Crypto Task Force, have been sympathetic to the digital assets industry's contention that it was being mishandled by the SEC. Uyeda, who took over as acting chairman after Donald Trump's inauguration, has made swift moves to shift the agency's course on crypto. This pending deal with Coinbase is arguably the most significant change