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SEC had sued Coinbase in 2023

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Coinbase argued crypto assets are not investment contracts

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Court has also paused SEC lawsuit against Binance

(Adds lawsuit details, background, paragraphs 2-8)

By Hannah Lang

WASHINGTON, Feb 27 (Reuters) - The U.S. Securities and

Exchange Commission on Thursday filed to dismiss its lawsuit

against Coinbase, 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.