Since booting out Gary Gensler from the SEC, the agency is determined to show it committed towards making a major change towards its approach towards crypto enforcement by dropping multiple lawsuits and investigations surrounding major crypto firms such as Coinbase, Consensys, Uniswap Robinhood, and Opensea.

Most recently, The U.S. Securities and Exchange Commission (SEC) announced that it had agreed to dismiss its lawsuit against Kraken. This decision marks a major win for the crypto industry and an end to what Kraken calls a "wasteful, politically motivated campaign."

SEC lawsuit against Kraken

Kraken also questions the intentions of SEC for filling the lawsuit in the first place, saying regulatory action must be based on facts, not political agendas.

Kraken even described the SEC's attack against its company as a misguided effort that misrepresented its business practices.

"The SEC's lawsuit, which mischaracterized our consistent business model, was always without merit."

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 lawsuit was initially filed by the SEC in November 2023, based on the allegation that the exchange had acted as an unregistered broker, dealer, exchange, and clearing agency.

But many had seen this lawsuit has less to do with the allegations, and more to do with how the SEC, led by Gary Gensler, is trying to crackdown and shut down crypto firms all around the United States.

A Turning Point for Crypto Regulation?

SEC, under the leadership of Gensler, was cracking down on crypto firms, such as Coinbase, Uniswap, and non-fungible marketplace OpenSea for a variety of reasons.

This strategy drew widespread criticism for creating regulatory uncertainty and stifling innovation, rather than targeting actual bad actors in the space. In its previous statement, Kraken underscored the crushing impact the SEC's crackdown had on the crypto landscape, stating

"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."

However, recent developments suggest that the regulatory climate in the U.S. is shifting. Since the change in SEC leadership, the agency has dropped or is rumored to be dropping multiple lawsuits and investigations.

Notably, on February 27, the SEC dismissed its case against Coinbase, and prior to that, it abandoned legal actions against Uniswap, OpenSea, and others.

Trump's leading the crypto charge

The SEC’s reversal comes amidst the crypto's community's demand for clearer regulation and guidelines for digital assets.

On February 7, Congress introduced a stablecoin bill aimed at strengthening the U.S. dollar’s dominance. Additionally, there is speculation that lawmakers may soon introduce a broader crypto regulatory framework, potentially an enhanced version of FIT21.

Adding to the tailwind is President Donald Trump's vision to make the US the "world capital of crypto," and more recently released the first crypto strategic reserve consisting of Bitcoin, Ethereum, XRP, Solana, and Cardano.

President Trump also announced that it will set its first-ever Crypto Summit on March 7, a monumental event that could for the first time bridge the gap between policymakers and the industry.

Immediately after his inauguration, President Trump fulfilled his promise and booted the SEC chairman from his seat and nominated pro-crypto Paul Atkins as the new SEC chairman. While Atkins awaits confirmation, acting SEC Chair Mark Uyeda has already begun scaling back enforcement efforts.

According to a February report, the SEC has created the Cyber and Emerging Technologies Unit to fight crypto fraud, a stark contrast to the sweeping industry crackdown approach used by Gensler.

With legal pressures easing and lawmakers focusing on structured regulation, the U.S crypto industry may be entering a new era of regulatory clarity and institutional adoption. If these trends continue, they could pave the way for greater innovation, investor confidence, and mainstream integration of digital assets.

The dismissal of the Kraken lawsuit marks not just a victory for the exchange but a potential turning point for crypto regulation in the U.S.