The US Securities and Exchange Commission has agreed to drop its lawsuit against Kraken, the cryptocurrency exchange revealed on March 3. The move ends what the exchange calls a “wasteful, politically motivated campaign” and “clears the path toward a stable, forward-thinking regulatory regime.”
According to Kraken, the lawsuit is being dismissed with prejudice, with no admission of wrongdoing, no penalties paid, and no changes to Kraken’s business. The SEC sued Kraken in November 2023, alleging that the exchange acted as a broker, dealer, exchange and clearing agency without registering with the SEC.
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The SEC, under Gary Gensler’s leadership, was prone to a policy of regulation by enforcement, suing or investigating crypto companies, such as Coinbase, Uniswap and non-fungible marketplace OpenSea, for a variety of reasons. This approach was widely criticized in the industry for stifling innovation, targeting legitimate crypto companies instead of going after bad actors and more.
The SEC’s latest actions may reflect the changing environment of the US government regarding crypto. Kraken writes about its case, “This case was never about protecting investors — it and other enforcement actions clouded instead of clarified. It undermined a nascent industry that repeatedly urged clear rules of the road.”
A shifting regulatory climate
Since the change in SEC leadership, the agency has dismissed or is rumored to drop various lawsuits and investigations that began during Gensler’s tenure. On Feb. 27, it dismissed its lawsuit against Coinbase. Previously, it had dropped lawsuits or investigations against Consensys, Uniswap, OpenSea, Gemini and Robinhood.
The moves come as the US is shaping up for increased regulatory clarity surrounding digital assets. On Feb. 7, US lawmakers introduced a stablecoin bill to boost dollar dominance. It is possible that lawmakers may introduce a general crypto regulation bill that is a stronger version of FIT21.
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In addition, there are further tailwinds: US President Donald Trump, who has said he wants to make the US the “world capital of crypto,” has announced plans for a crypto strategic reserve consisting of Bitcoin (BTC), Ether (ETH), XRP (XRP), Solana (SOL) and Cardano (ADA). The president will be hosting the first White House Crypto Summit on March 7.
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