Coinbase Shares Rise As SEC Moves To Drop Lawsuit: What's Going On?

Coinbase Global Inc. COIN shares are trading higher Friday after the company announced that the Securities and Exchange Commission (SEC) plans to drop its lawsuit against the crypto exchange.

What To Know: According to The Wall Street Journal, the lawsuit, which was a key part of the SEC's efforts to regulate digital assets under investor-protection rules, had been ongoing for nearly two years. Coinbase had consistently fought the case, arguing that existing laws did not classify crypto assets as securities.

The SEC's decision to dismiss the case still requires approval from the commission, which Coinbase expects to happen next week. The move follows a shift in regulatory stance under President Donald Trump, who has embraced the crypto industry and pledged to reduce the commission's pressure on digital asset firms.

Under former SEC Chair Gary Gensler, the agency aggressively pursued cases against major exchanges like Coinbase, Binance and Kraken, aiming to bring them under the same regulatory framework as traditional financial institutions. With Gensler stepping down in January, Acting SEC Chairman Mark Uyeda has signaled a more lenient approach, focusing enforcement resources primarily on fraud rather than broad regulatory oversight.

If the case is dismissed, Coinbase could benefit from a more favorable business environment, allowing it to expand token listings and financial products. The company has already seen strong financial performance, with a better-than-expected fourth-quarter earnings report fueled by the post-election crypto rally.

Analysts suggest that without the legal overhang, Coinbase could further diversify revenue streams beyond trading, particularly in staking services, which were previously targeted by the SEC's allegations.

While the SEC appears to be retreating from its tough stance on crypto, legal battles continue for other exchanges. The agency remains in litigation with Binance and Kraken, though regulators have indicated a willingness to resolve those cases through ongoing task force discussions.

Meanwhile, lawmakers in Congress are working on legislation that would shift oversight of most cryptocurrencies to the Commodity Futures Trading Commission (CFTC), potentially limiting the SEC's influence over the industry.

COIN Price Action: Coin shares were up 2.71% at $263.58 at the time of writing, according to Benzinga Pro.

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