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Move would end years-long legal battle

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SEC under Trump has quickly overhauled approach to crypto

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Federal judge has paused SEC lawsuit against Binance

By Hannah Lang

Feb 21 (Reuters) - Coinbase said on Friday the

U.S. securities regulator planned to withdraw its lawsuit

against the crypto exchange, ending a contentious years-long

legal battle once considered existential for the trading

platform and the broader sector.

The Securities and Exchange Commission has moved quickly to

overhaul the agency's approach to policing the crypto sector

under Republican leadership since President Donald Trump took

office. The agency has established a dedicated task force and

rescinded crypto-related accounting guidance.

The decision to end its litigation against Coinbase, one of

a number of lawsuits brought under the SEC's prior chair, would

be the most dramatic move yet under the acting Republican

leadership. The regulator has also created a task force to work

with the industry to create a pathway to regulation and

reorganized its crypto enforcement unit, reassigning key names

in crypto litigation to other areas.

"The war against crypto, at least as it applies to Coinbase,

is over," Coinbase Chief Legal Officer Paul Grewal said in an

interview.

The SEC sued both Coinbase, the largest U.S. crypto

exchange, and rival trading platform Binance in 2023. A court

has separately paused the agency's lawsuit against the other

firm after a request from the SEC and Binance, citing

implications of the new task force.

The SEC alleged Coinbase flouted its rules and facilitated

trading in at least 13 crypto tokens that it said should have

been registered as securities.

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.

Coinbase has 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.

Acting SEC Chair Mark Uyeda and fellow Republican

Commissioner Hester Peirce have taken issue with former Chair

Gary Gensler's approach to litigation, arguing instead for new

crypto-specific rules.

"We have a very positive, productive relationship with this

new SEC and working lock step with them, arm in arm, to get this

addressed," Grewal said.