Coinbase Stock Jumps After Crypto Exchange Says SEC Looking To Dismiss Lawsuit

Coinbase (COIN) shares ticked higher in early trading after the cryptocurrency exchange said that the U.S. Securities and Exchange Commission (SEC) is recommending the dismissal of a two-year lawsuit against it.

The SEC sued Coinbase during the Biden administration for operating an unregistered securities exchange and offering an unregistered security to the public via their staking-as-a-service program.

“SEC staff has agreed in principle to dismiss its unlawful enforcement case against Coinbase, subject to Commissioner approval – righting a major wrong,” Paul Grewal, Coinbase’s chief legal officer, said in a blog on the exchange’s website.

What Does This Mean For Coinbase And The Crypto Markets?

There has been a shift in investor sentiment toward bitcoin (BTCUSD) and the broader crypto markets since President Donald Trump, who has backed the industry, was re-elected late last year. Additionally, a more crypto-friendly Congress holds the promise of greater regulatory clarity for the industry that had often criticized the SEC’s previous enforcement-heavy approach.

The SEC’s move to drop this lawsuit signals that the regulator has already begun softening its stance.

“While dismissal will be a major win for the rule of law – and a clear vindication of our position – most of all it will be a win for the entire industry and the 52 million Americans who have owned a digital asset,” Grewal wrote.

And the trend may continue. While this action occurred under the SEC’s acting chief, Trump has nominated pro-crypto Paul Atkins to lead the agency. Former SEC chief Gary Gensler, who had been at odds with the crypto industry due to all the enforcement actions, stepped down last month.

Coinbase shares are up almost 60% in the past year though they have gained roughly 5% so far this year.