Oregon Lawsuit Complicates Crypto Regulatory Landscape
On April 18, 2025, the State of Oregon initiated a civil enforcement action against Coinbase Global, Inc. (“Coinbase”) for allegedly selling unregistered securities. In a press release, Oregon Attorney General Dan Rayfield noted that the action was prompted by the United States Securities and Exchange Commission (“SEC”) dropping its own case against Coinbase, expressing his belief that “states must fill the enforcement vacuum left by federal regulators under the new administration.” This raises the question: is the federal government’s shift in its approach to crypto regulation an “enforcement vacuum” or a return to order?
Oregon’s complaint asserts that specific digital assets on Coinbase’s platform qualify as investment contracts and, consequently, securities under Oregon law. To be offered for sale in the state, a security must either be registered or fall under an exemption (e.g., “Federal covered securities may be offered and sold in [Oregon] without registration,” in accordance with certain administrative conditions). ORS 59.049, 59.055, 59.115. Oregon legally defines a security to include “investment contracts” (see ORS 59.015), and its courts employ a modified version of a test established by the United States Supreme Court in SEC v. W.J. Howey, 328 U.S. 293 (1946) to determine if an investment qualifies as a security. Oregon claims that Coinbase solicited, participated in, or materially aided the sale of unregistered crypto securities, violating Oregon’s blue sky laws.
The lawsuit is aggressive as it intrudes upon the SEC’s historically exclusive authority to regulate national exchanges, making it susceptible to legal challenges. Furthermore, it appears to have been filed in direct response to the SEC’s dismissal of its Coinbase enforcement action. However, the cancellation of this case along with others involving crypto firms is not the sole activity the SEC has engaged in recently. Since President Trump returned to the White House, the SEC has taken several actions aimed at establishing some order in crypto regulation. Recently, in remarks, newly appointed SEC Chair Paul Atkins reaffirmed the SEC’s commitment to creating a “rational, fit-for-purpose framework for crypto assets,” stating that innovation has been “stifled for the last several years due to market and regulatory uncertainty that the SEC has unfortunately cultivated.”
In line with this objective, the SEC has formed a Crypto Task Force tasked with “helping the Commission establish clear regulatory guidelines, provide realistic registration paths, create sensible disclosure frameworks, and allocate enforcement resources effectively.” The Task Force has led industry roundtables to discuss crucial topics related to crypto regulation. During the first roundtable, then-Acting Chair Mark Uyeda noted that a more constructive approach might include using notice-and-comment rulemaking or clarifying the Commission’s rationale through releases instead of enforcement actions for classifying crypto assets under federal securities laws. Roundtable discussions thus far have covered defining the security status of digital assets, specific regulations for crypto trading, know-your-customer considerations for crypto custody, and tokenization. A fifth roundtable is set for June 9, focusing on “DeFi and the American Spirit.” These sessions are streamed live to the public and are available for later viewing on the SEC’s website.
Additionally, during a March 2025 conference, Uyeda stated that the SEC would carry out economic analyses aimed at helping the agency differentiate between effective and efficient approaches versus those that are effective but costly. He noted that the SEC is “statutorily required to consider efficiency, competition, and capital formation in its rulemaking. Our Division of Economic and Risk Analysis has developed robust procedures that align with this statutory mandate, recognizing that high-quality economic analysis is vital to our rulemaking.” Industry participants might reasonably argue that these initiatives are far from the SEC “giving up” and creating an “enforcement vacuum” that states must strive to fill.
In contrast to Oregon, several states have stepped back from their pursuit of Coinbase. The SEC’s dismissed lawsuit against Coinbase was initially filed in June 2023, alongside actions from ten states claiming the company’s management of its crypto staking program led to unregistered securities offerings. According to the SEC’s press release associated with its complaint, these ten states were part of a coordinated task force working with the SEC. Following the SEC’s dismissal of its Coinbase case with prejudice in February 2025, five of those states—Vermont, Alabama, Illinois, Kentucky, and South Carolina—also dropped their actions. Some regulators that rescinded their Coinbase lawsuits have pointed to the SEC’s ongoing rulemaking initiatives in their withdrawal documents. For instance, the Alabama Securities Commission’s Consent Order rescinded its June 6, 2023 Show Cause Order without prejudice, emphasizing the work of the new SEC Crypto Task Force and stating it would be prudent to allow policymakers time to consider regulatory structures. The other five states engaged in the task force—California, New Jersey, Maryland, Washington, and Wisconsin—have maintained their enforcement actions against Coinbase for the time being.
While states may seek independent paths in response to perceived regulatory gaps, restraint may be a more prudent approach when federal efforts are actively attempting to fill that gap with a legal framework backed by stakeholder input. State actions like Oregon’s introduce new complexities in the quest for regulatory clarity. Given the current landscape, both participants in the crypto industry and investors stand to benefit from government patience and collaboration as the SEC’s Crypto Task Force continues its work.
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