The U.S. Securities and Exchange Commission (SEC) made waves on March 4, 2025, announcing it’s dropping its lawsuit against Kraken, marking a surprising turn in the agency’s approach to crypto regulation. The move comes as the crypto industry rides a wave of policy shifts under the Trump administration, which has pushed for a friendlier stance on digital assets since taking office in January 2025.
The SEC initially sued Kraken in November 2022, alleging the exchange operated as an unregistered securities broker and mixed customer funds, seeking penalties and an injunction. Kraken fought back, arguing the SEC overreached and lacked clear authority over crypto exchanges. In May 2023, Kraken testified before Congress, slamming the SEC’s stance and calling for better crypto laws. Now, nearly two years later, the SEC’s withdrawal—confirmed in a court filing today—signals a major pivot, likely influenced by Trump’s January executive order on digital financial tech and the appointment of pro-crypto SEC Chair Paul Atkins in February 2025.
“Today’s decision reflects our commitment to a balanced regulatory framework that fosters innovation while protecting investors,” SEC Chair Atkins said in a statement. The dismissal, without prejudice, means the SEC could refile later, but for now, it’s a win for Kraken and a nod to the industry’s push for clarity. Kraken’s CEO, David Ripley, hailed it on X as “a step toward sensible regulation,” adding the exchange would keep pushing for rules that don’t stifle crypto’s growth.
This comes hot on the heels of Trump’s Crypto Strategic Reserve announcement on March 2, naming Bitcoin, Ethereum, XRP, Solana, and Cardano, and his upcoming White House Crypto Summit on March 7. The SEC’s also facing deadlines on Ethereum ETF options—like Cboe’s Fidelity Ethereum ETF proposal, due May 2, and Nasdaq’s BlackRock iShares Ethereum Trust, set for April 9—suggesting a broader rethink of its crypto playbook. Kraken’s case, once a flashpoint in the SEC’s enforcement-heavy era under Gary Gensler, now looks like a relic as the agency aligns with Trump’s vision of making the U.S. the “Crypto Capital of the World.”
