A landmark US cryptocurrency lawsuit over government allegations against Coinbase for operating an unregistered exchange has been dismissed entirely.

Updated Feb 28, 2025 7:34 pm UTC Published Feb 27, 2025 9:22 pm UTC

What you should know:

• The Securities and Exchange Commission, as expected, halted enforcement of its ruling against Coinbase, moving further away from its previous position that most cryptocurrency tokens were securities requiring registration.
• The agency announced its intention to change the rate and control the cryptocurrency in a more “transparent” manner.

Coinbase has been freed from a protracted lawsuit with the U.S. Securities and Exchange Commission, as the agency agreed to dismiss the case that has become one of the industry's leading disputes in federal court.

Although the SEC’s intention to settle the legal dispute was made public when the U.S. cryptocurrency exchange announced the settlement last week, commissioners were forced to hold a formal vote to ask a federal judge to end the case. The rejection, which was opposed by the commission’s lone Democrat, Caroline Crenshaw, was made so that the regulator could not change its mind later.

“It’s time for the commission to rethink its approach and develop crypto policy in a more transparent manner,” said Acting SEC Chairman Mark Ueda. SEC lawyers have already filed a motion to dismiss the case.

The dismissal of this underlying case does not relieve the SEC of other legal matters involving Coinbase, including the company's motion to compel the agency to establish rules for cryptocurrency and Coinbase's quest to obtain internal documents from the exchange's ongoing operations to reveal the regulator's private thinking on its approach to digital assets.

However, the enforcement case was a major legal challenge for a US public company, and it touched on central legal questions about what constitutes crypto and when (and how) a digital asset exchange should register with the agency. These fundamental questions remain unanswered, and it is now up to the US Congress to provide answers.

With the departure of the SEC’s previous leadership — especially crypto-skeptic Chairman Gary Gensler — President Donald Trump’s interim Chairman Mark Uyeda has begun to overhaul the agency’s legal strategy and its stance on digital assets. Uyeda appointed fellow Republican Commissioner Hester Peirce to lead the cryptocurrency task force, and both have been vocal critics of Gensler’s approach to the industry.

The digital asset sector did not wait for the confirmation of Paul Atkins, Trump’s pick to lead the agency permanently. Both Ujeda and Pierce served as his advisers when he served as an SEC commissioner, so they are widely expected to pursue a similar course of action to the one he would support. So far, that course has led to a wave of dropped cryptocurrency investigations and cases, including those against Robinhood, Gemini, and ConsenSys MetaMask, as well as the suspension of cases involving Tron and Binance.

The regulator no longer adheres to the US Supreme Court's interpretation of the so-called Howey test, which it believed indicated that many cryptocurrency projects qualify as securities.

“Goodbye,” Chief Legal Officer Paul Grewal wrote on social media site X after the SEC's announcement on Thursday. “And good riddance.”

But Commissioner Crenshaw argues that the mass dismissals and dismissals of such cases undermine the authority of the enforcement unit, suggesting it is “politicized” and tailored to the wishes of each new administration.

“Whatever the law of tomorrow, market participants should not be able to evade the law as it stands,” Crenshaw said in a statement. “Today's actions create even more uncertainty. What exactly the law is

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