SEC Drops Kraken Lawsuit, Signaling New Crypto Regulatory Era

Coin WorldMonday, Mar 3, 2025 11:46 am ET

1min read

The US Securities and Exchange Commission (SEC) has agreed to drop its lawsuit against Kraken, a prominent cryptocurrency exchange, as announced by the company on March 3. This move marks the end of what Kraken describes as a "wasteful, politically motivated campaign" and clears the path for a more stable and forward-thinking regulatory regime in the crypto industry.

The SEC's lawsuit against Kraken, filed in November 2023, alleged that the exchange acted as a broker, dealer, exchange, and clearing agency without registering with the SEC. However, the lawsuit is now being dismissed with prejudice, meaning Kraken faces no admission of wrongdoing, no penalties, and no changes to its business operations.

The SEC's approach under former chair Gary Gensler was criticized for targeting legitimate crypto companies, such as coinbase, Uniswap, and OpenSea, through regulation by enforcement. This strategy was seen as stifling innovation and failing to focus on bad actors in the industry. Kraken's case, according to the company, was not about protecting investors but rather clouded the regulatory landscape and undermined the nascent crypto industry.

Since the change in SEC leadership, the agency has dismissed or is rumored to drop various lawsuits and investigations that began during Gensler's tenure. On Feb. 27, the SEC dismissed its lawsuit against Coinbase. Previously, it had dropped lawsuits or investigations against Consensys, Uniswap, OpenSea, Gemini, and Robinhood.

The shifting regulatory climate in the US is accompanied by increased regulatory clarity surrounding digital assets. On Feb. 7, US lawmakers introduced a stablecoin bill aimed at boosting dollar dominance. There is a possibility that lawmakers may introduce a general crypto regulation bill that is a stronger version of FIT21.

Additionally, there are further tailwinds for the crypto industry. US President Donald Trump has expressed his desire to make the US the "world capital of crypto" and has announced plans for a crypto strategic reserve consisting of Bitcoin (BTC), Ether (ETH), XRP (XRP), Solana (SOL), and Cardano (ADA). The president will be hosting the first White House Crypto Summit on March 7.

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