This week, the digital currency industry had arguably four big wins, as the Securities and Exchange Commission (SEC) dropped lawsuits and investigations into major players, including Coinbase (NASDAQ: COINBASE), Robinhood Crypto (NASDAQ: HOOD), Uniswap, and the non-fungible token (NFT) marketplace OpenSea.
Coinbase: In June 2023, the SEC sued Coinbase, alleging that it had been operating as an unregistered broker, exchange, and clearing agency since 2019. The commission claimed that the company violated federal securities laws by facilitating unregistered securities trading. After over a year of legal battles, the SEC dismissed the case on February 21, 2025.
Robinhood Crypto: In May 2024, Robinhood received a Wells Notice—a formal warning from the SEC that it was considering enforcement action against the company’s crypto operations. However, the SEC abruptly closed it’s investigation on February 24, 2025.
Uniswap Labs: Uniswap Labs received a Wells Notice in April 2024, with allegations that it was operating as an unregistered securities broker and exchange. But on February 25, 2025, the SEC dropped it’s investigation into Uniswap.
OpenSea: Similarly, OpenSea, one of the largest NFT marketplaces, was notified in August 2024 that the SEC was investigating whether certain NFTs on its platform should be classified as securities, but the SEC discontinued the investigation on February 21, 2025.
Each of these companies spent years and millions of dollars in legal fees battling the SEC. Now, seemingly overnight, the regulatory threats they faced have vanished. So, what changed?
There’s been a major shift in the SEC’s approach to crypto regulation, and while this might seem like a win for digital asset companies, the reality is much more complex.
The SEC’s crypto policy shift
Under former SEC Chair Gary Gensler, the agency took an aggressive stance against crypto. Gensler repeatedly stated that existing securities laws already covered most crypto assets and that many industry players failed to comply. His approach emphasized enforcement over guidance, leading to a wave of lawsuits and investigations that put major crypto firms in hot water.
One of these firms was Coinbase, which tried to push back and asked the SEC for clearer regulatory guidelines. However, the agency refused to provide them, which led a federal court to criticize the SEC’s actions, calling their refusal “arbitrary and capricious.” Afterward, the court ordered the SEC to provide a more detailed explanation for its refusal to offer guidance—an order the agency never fulfilled because before it had a chance to do so, there was a change in SEC leadership.
Gensler’s departure ushered in a new era of crypto policy, marked by a hands-off approach that is much different than the SEC’s enforcement-heavy tactics of the past.
Trump’s pro-crypto administration
President Donald Trump campaigned on a pro-crypto platform and as soon as he won the election he began making the pro-crypto America he spoke about into a reality. He created a new “Crypto Czar” role in the White House and appointed venture capitalist David Sacks to the position to develop a clear regulatory framework for the industry, something the previous administration had failed to do.
On his third day in office, Trump signed the “Strengthening American Leadership in Digital Financial Technology” executive order, which mandated the formation of a Crypto Task Force. The task force aims to clarify how federal securities laws apply to crypto assets and recommend policies that encourage innovation while protecting investors.
At face value, this shift appears to be exactly what the industry has been asking for: less government interference and clearer guidelines. However, in practice, the effects of these changes have been much different from those they had in theory.
When rumors of regulatory relief first surfaced, the crypto market responded enthusiastically. Prices soared in anticipation of a more business-friendly environment. However, once these changes were officially implemented, the reality didn’t quite match expectations, and market prices have been falling fast.
Instead of spurring new business activity, the shift in regulation has led to increased market speculation and a surge in questionable projects—initiatives consumers have been investing in and losing money unless they can sell hours after the project first launches. With fewer legal roadblocks, an influx of new tokens, NFTs, and decentralized finance (DeFi) projects have emerged—many of which lack real utility and resemble high-stakes gambling operations.
Is crypto becoming the Wild West again?
One of the biggest concerns emerging from the SEC’s new hands-off approach is the rise in fraudulent activity. While crypto businesses like Coinbase and Robinhood are now free to operate without regulatory interference, the lack of oversight has also created a breeding ground for scams and pump-and-dump schemes.
Hester Peirce, the head of the SEC’s Crypto Task Force, recently stated that the SEC does not have jurisdiction over most crypto assets, including many coins, tokens, and NFTs. This raises an important question: If the SEC isn’t the regulator, then who is?
Right now, no clear answer exists, which has made the industry a bit of a free-for-all.
For example, in the days leading up to Trump’s inauguration, both he and his wife, Melania, launched their memecoins. The tokens were marketed as fun, community-driven projects that weren’t meant to be investments. Still, a large number of people saw the tokens as a trading opportunity, invested, and have experienced each token’s 80+% drop from their all-time highs. Many of their supporters lost money, while insiders profited—yet no regulatory body has stepped in to investigate.
Where does crypto go from here?
The SEC’s reversal on crypto enforcement has opened the door for industry growth. However, rather than incubating legitimate business expansion, it has primarily created an environment where speculation and get-rich-quick schemes thrive.
So, what’s the solution? I believe a return to the Gensler-era crackdown isn’t the answer. That approach stifled innovation, drove companies out of the U.S. entirely, and caused many others to suspend their business operations. However, the current free-for-all in the market isn’t sustainable either.
At this point, meaningful change isn’t going to come from regulators alone. Their role is to create policies that either restrict or enable industry growth. It’s up to digital asset companies themselves to demonstrate real value beyond speculative trading. If the industry wants long-term legitimacy, it needs to move beyond the casino-like atmosphere and focus on building services and tools that offer tangible benefits and create–rather than extract and redistribute–value for users.
Watch: Reggie Middleton on DeFi, booms/busts & crypto regulation
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Source: https://coingeek.com/this-week-in-crypto-behind-sec-new-hands-off-approach/