In SEC crypto news, we take a look back at May 19, 2025, when Coinbase became the first crypto-native company admitted to the S&P 500, the same index that tracks trillions of dollars in passive investments and sits inside millions of American retirement accounts. COIN shares were already up approximately 24% on the day of the announcement and, as of June 2025, were the best-performing component of the index.
That milestone came almost exactly two years after the SEC sued Coinbase in one of the largest enforcement actions in cryptocurrency history, a case the agency ultimately dropped with no sanctions, no required changes to Coinbase’s business, and with an estimated $50 million per year in legal costs freed up for the company.
Here’s the central tension this article reveals: Coinbase was sued in a case that the SEC said could prove the entire exchange was operating illegally, but three years later the company paid nothing, changed nothing, and landed inside America’s most prestigious stock index. So what really happened between June 2023 and May 2025 and what does it mean for cryptocurrency regulation going forward?
COINBASE-BACKED CRYPTO GROUP URGES SENATE TO PASS CLARITY ACT
Stand With Crypto, an advocacy group launched by Coinbase, says more than 200 organizations have sent a letter to the US Senate urging lawmakers to introduce the CLARITY Act without delay. pic.twitter.com/y8NcxJE2HN
– Coin Bureau (@coinbureau) June 8, 2026
Coinbase SEC Crypto Lawsuit Explained: What the Case Really Alleges
The SEC’s lawsuit against Coinbase, filed on June 6, 2023, compares the situation to a city inspector finding a restaurant operating without a license and serving potentially illegal food. The SEC accused Coinbase of acting as an unregistered stock exchange, broker, and national clearing agency, in addition to offering unregistered securities through its staking-as-a-service product.
The agency’s central argument is that several tokens listed on Coinbase, including SOL, ADA and MATIC, are securities under US law based on the Howey test, which requires an investment in a common enterprise with an expectation of profit.
If the SEC’s opinion prevails, Coinbase’s business model could be fundamentally altered. Following a prior notice from Wells indicating enforcement action, COIN stock fell approximately 12% on the day the lawsuit was filed.
CEO Brian Armstrong and Chief Legal Officer Paul Grewal responded, stating that crypto tokens do not fit Howey’s definition and criticizing the SEC’s enforcement approach. The implications of this case extend far beyond Coinbase.
The Three-Year Fight: How Coinbase Took on the SEC and Didn’t Blink
Great month @Coinbase:
– First company to bring global crypto options + crooks to the US in a compliant way
– Official USDC treasury implementer for @HyperliquidX
– Gold and silver criminals now live outside the US (coming to the US soon)
– Partnered with Standard Chartered to expand globally… https://t.co/5aZAv4iLfA—Brian Armstrong (@brian_armstrong) June 3, 2026
The legal battle unfolded in different phases, each of which changed the odds in ways that were not obvious in real time.
June 2023: Demand arrives. The SEC files in the Southern District of New York. Coinbase announces that it will fight rather than settle, a strategic choice that separated it from other crypto companies that reached agreements with regulators during the same period.
March 2024: A court ruling is valid both ways. On March 27, 2024, Judge Katherine Polk Failla sided with the SEC at the pleadings stage and ruled that the agency had adequately alleged that multiple tokens on Coinbase and its staking program involved securities transactions. The judge dismissed only the SEC’s most limited claim related to Coinbase Wallet. The ruling kept the case alive and left a significant cloud of legal uncertainty over Coinbase ahead of an election year.
January 2025: The tide begins to turn. Two new developments arrived in quick succession. The Third Circuit Court of Appeals ruled that the SEC’s rejection of Coinbase’s 2022 petition for cryptocurrency-specific rulemaking was “conclusive and insufficiently reasoned,” effectively telling the agency that it couldn’t simply say no without a real explanation. Separately, the SEC quietly reassigned the lead trial attorney leading its cryptocurrency enforcement cases, including the Coinbase matter, to an internal IT-related role, a move widely interpreted by legal professionals as a sign that the agency’s aggressive enforcement posture was being wound down.
February 27, 2025 – Dismissal with prejudice. Under new SEC leadership and a clear policy shift away from enforcement-first crypto regulation, the agency filed a joint stipulation to dismiss the case in SDNY. The SEC’s own filing stated that the dismissal “was not based on any evaluation of the merits of the claims,” an explicit acknowledgment that this was a political decision, not a defeat in court. No sanctions. No operational changes are required. The case was over. Coinbase estimated it would save more than $50 million annually in legal costs. The broader shift in cryptocurrency regulation toward legislative frameworks like the CLARITY Act had helped reshape the environment in which the SEC operated.
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S&P 500 and zero penalties: What Coinbase’s victory for cryptocurrency regulation really indicates
A cursory reading of Coinbase’s history suggests that it lucked out with a management change that saved it from a potentially losing case against the SEC. However, Coinbase fought the case for nearly two years, making significant progress in the Third Circuit and building a legal record that challenged the SEC’s enforcement approach.
Manatt noted that the collapse of Coinbase’s SEC lawsuit and the suspension of a related case against Binance signify a shift from adversarial litigation to cooperative policymaking in digital asset regulation. The SEC’s strategy of using the Howey test against stocks has been shelved for now.
Coinbase’s inclusion in the S&P 500 on May 19, 2025 marked a major milestone, giving millions of Americans indirect exposure to cryptocurrencies through their retirement accounts. CEO Brian Armstrong saw this as proof of the widespread acceptance of digital assets.
However, challenges remain, including an ongoing SEC investigation described as a legacy investigation and a private lawsuit focused on regulatory misrepresentations. While the SEC’s new Crypto Task Force moves toward rulemaking, a comprehensive regulatory framework remains lacking. Coinbase is strategically expanding into new markets, taking advantage of legal developments to increase its presence.
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The post From SEC Crypto Lawsuit to S&P 500: How Coinbase Won Its Three-Year Regulatory War appeared first on 99Bitcoins.
