SEC's Coinbase Reversal Is Only the Latest Pro-Crypto Shift Under Trump

The SEC is abandoning cases and shaping new rules for the industry, reflecting the Trump administration’s more crypto-friendly approach.

The Securities and Exchange Commission has agreed to drop its legal case against Coinbase, the exchange said Friday, pending approval by the regulator’s commissioners. But it’s just one of several actions the agency has taken since the inauguration of President Donald Trump to deepen its crypto-friendly tone shift.

Coinbase CEO Brian Armstrong said Friday that the SEC had agreed to end its lawsuit against the trading platform. The regulator will not fine the largest U.S. crypto exchange by daily trading volumes when it kills the case, Armstrong added, assuming that the plan is approved.

The abandonment of the lawsuit, which posed broader implications for the future of the digital asset industry in the U.S., is among the most recent signals that federal regulators are softening their stance on digital assets under the new administration.

On the campaign trail, the pro-crypto Trump vowed to push the SEC to end its crypto crackdown and amplify more tech-friendly voices on Capitol Hill. Now we’re seeing that plan in action, though it’s still early days for the SEC’s turnaround.

New task force and more

In fulfilling those promises, Trump last December appointed pro-crypto Paul Atkins as SEC chair to lead an about-face on digital assets. Since then, the agency has made a slew of changes to its crypto agenda ahead of Atkins’ confirmation.

On Wednesday, the Commission voluntarily dismissed its own appeal of a ruling that prevented federal regulators from expanding the application of securities laws to decentralized finance users and projects.

A day later, the regulator announced it would start a crypto crime-fighting unit to “focus on combating cyber-related misconduct and to protect retail investors from bad actors in the emerging technologies space.”

The new committee will replace the SEC’s Crypto Assets and Cyber Unit, furthering the agency’s abandonment of its efforts to curb digital assets companies’ powers during the Biden administration.

In January, one day after Trump’s inauguration, Acting SEC Chair Mark Uyeda announced the formation of a crypto task force at the agency. The task force, led by crypto-friendly Commissioner Hester Peirce, aims to figure out a path forward for U.S. crypto regulation following the enforcement-heavy approach of the previous administration.

“The SEC can do better,” read the task force announcement from the regulator.

In February, Peirce shared her thoughts on the formation of the task force, writing: “It took us a long time to get into this mess, and it is going to take us some time to get out of it.”

Also this month, the SEC and crypto exchange Binance jointly requested a 60-day pause to their case—which was granted on Feb. 14—due to the changing regulatory dynamics, including the creation of the SEC’s crypto task force.

A new era

Under former Chairman Gary Gensler, the SEC brought enforcement actions against more than a dozen digital assets companies, including XRP issuer Ripple Labs, centralized exchanges such as Kraken and Binance.US, and the decentralized exchange Uniswap.

During that time, the SEC also brought a complaint against Coinbase, alleging the company operated as an unregistered securities exchange and failed to register its crypto staking program with federal regulators.

Under President Trump, it appears such legal battles will become a thing of the past, however. Trump has emphasized that crypto companies and holders will enjoy favored treatment under his second administration.

“We will have regulations, but from now on, the rules will be written by people who love your industry, not hate your industry,” Trump said last summer at the Bitcoin 2024 conference in Nashville.

Edited by James Rubin