SEC dismisses lawsuit against Coinbase regarding cryptocurrency registration

Cryptocurrency exchange Coinbase says that the US Securities and Exchange Commission (SEC) has in principle agreed to drop its lawsuit against the exchange. This comes after the securities regulator charged the company with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency in June 2023. SEC argued that due to its failure to register, the company had deprived its investors of protections such as routine inspections by the SEC and safeguards against conflicts of interest.

Further, the regulator had argued that Coinbase operated the offer and sale of its crypto asset staking-as-a-service program. This, it emphasised, took away critical protections and disclosures from Coinbase customers. SEC had sought injunctive relief to restrain Coinbase from carrying out its operations.

Demands for clarity on crypto registration:

Coinbase says that the SEC had reviewed the company when it was going public in 2021. Further, the company said that the regulator had not created a way for crypto companies to come and register themselves, adding that it had met with the SEC 30 times in 2022 about this matter.

The company had been adamantly demanding a regulation process for cryptocurrencies for a long time. In a blog post in March 2023, Coinbase said that the regulator had asked it to provide its views on what a crypto registration process should look like. Then, in April 2023, Coinbase sued SEC asking it to use its formal rulemaking process to give guidance to the crypto industry.

Coinbase’s response to the dropped lawsuit:

The company said that the fact that the SEC is dropping its lawsuit against Coinbase’s lack of registration is a “clear vindication” of its legal position. Coinbase CEO Brian Armstrong said that the company spent $50 million defending its position in the lawsuit.

SEC staff have agreed to dismiss their case against us (pending Commission approval).
But this isn’t the end.
It’s the beginning.
And if there were ever a time to build—that time is now.

Thank you to everyone who stood with us, and stood with crypto. pic.twitter.com/gjokUZPotz

— Coinbase (@coinbase) February 21, 2025

“To ensure innovation continues in America and a rogue regulator cannot weaponize the lack of clarity again, it is critical that we pass legislation which provides the long-term certainty needed for the US to lead in this industry,” the company emphasised, reiterating its demand for regulation.

Why it matters:

The fact that the SEC dropped its lawsuit indicates a changing position on cryptocurrencies in the US. This became evident when late last year former SEC Chief Gary Gensler, under whose leadership the regulator had filed complaints against Coinbase and also Binance, stepped down from his role. Moreover, US President Donald Trump has promised the country a crypto advisory council and has also come up with his own cryptocurrency, World Liberty Financial, which indicates his pro-crypto stance.