The U.S. Securities and Exchange Commission on Thursday filed to dismiss its lawsuit against Coinbase (COIN.O), the largest U.S. cryptocurrency exchange, putting an end to a legal battle as the regulator moves to change course under President Donald Trump.
The SEC sued Coinbase in 2023, alleging the exchange flouted the agency's rules and facilitated trading in at least 13 crypto tokens that it said should have been registered as securities.
Coinbase had said last week that the SEC planned to withdraw the case.
Coinbase argued that crypto assets, unlike stocks and bonds, do not meet the definition of an investment contract, a position held by the vast majority of the crypto industry. As outlined in a U.S. Supreme Court case, a key test for whether an investment product is a security is whether people are investing in a common enterprise with the expectation of profit.
The lawsuit also targeted Coinbase's "staking" program, in which it pools assets to verify activity on blockchain networks and takes commissions, in exchange for "rewards" to customers. The SEC said that program should have been registered with the agency.
The SEC also sued rival trading platform Binance in 2023. A court has separately paused the agency's lawsuit against Binance after a joint request, citing implications of the SEC's new crypto task force, which was established shortly after Trump took office last month.
Republican officials at the SEC immediately began to overhaul the agency's crypto policies, even before the arrival of Paul Atkins, Trump's crypto-friendly pick for SEC chair.
Revisiting cases against crypto firms - especially those which violated the SEC's rules but were not alleged to have defrauded investors - has been broadly anticipated. Many legal experts, however, told Reuters they expected the SEC to seek settlements and any mass effort to dismiss all pending matters would be seen as unprecedented.
