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A top executive at Coinbase Global Inc. said Friday the Securities and Exchange Commission has withdrawn an enforcement action against the cryptocurrency platform, a move the executive lauded as a “victory not just for Coinbase, but for our customers, the United States, and individual freedom.”
“We’ve always maintained that we were right on the facts and the law, and today’s announcement confirms that this case should never have been filed in the first place,” said Paul Grewal, chief legal officer for the San Francisco-based company, in a blog post. Officials at the SEC did not immediately respond to a request for comment on the matter.
The regulator sued Coinbase in June 2023, alleging it was operating as an unregulated broker. In January, Mark Uyeda took over as acting chairman of the agency as the Trump administration began replacing the heads of various arms of the federal government. Activist head Gary Gensler resigned Jan. 20 after three-and-a-half years as chairman.
Grewal in his post characterizes the SEC as a “rogue regulator” and called the news “a clear vindication of our position.” He also contends Washington needs to go farther in buttressing the position of digital-currency firms. “It is critical that we pass legislation which provides the long-term certainty needed for the U.S. to lead in this industry,” he notes. Founded in 2012, Coinbase operates a cryptocurrency exchange that allows users to buy and sell digital currencies, as well as store them.
Experts who follow the developing crypto market lauded the SEC’s withdrawal of its litigation against Coinbase. “It’s a good thing,” says Aaron McPherson, founder and principal at AFM Consulting Inc. “This regulatory overhang has been creating a lot of uncertainty and reluctance to invest [in crypto firms]. Coinbase has proven stability and is well run. You wonder if the SEC under Gary Gensler didn’t think a cryptocurrency exchange should exist.”
But McPherson is careful to distinguish between established companies like Coinbase and other firms whose foundations may be less solid. “I never thought shutting down Coinbase was the answer, but there has to be a separate regulatory regime for cryptocurrency,” he argues. “A lot of crypto offerings are immature, [which] makes it much riskier for investors, so there does need to be some thinking about what kind of protection needs to be in place.” One such area that stands out, he says, concerns information for users and investors. “There needs to be even more disclosure,” he argues.
The picture may now brighten, not just for Coinbase but for other crypto firms, McPherson contends. The SEC’s latest action is “a good thing,” he says. “This regulatory overhang has been creating a lot of uncertainty and reluctance to invest.”
Investment aside, spending may be on the upswing, as well. Just since the inauguration of Donald Trump, whose administration has been seen as more favorable toward digital currency than its predecessor, the volume of crypto spending on Bitpay has shot up 36% compared to the same period a year ago, the cryptocurrency platform said.
