In SEC crypto news, we look at May 19, 2025, when Coinbase became the first crypto-native company ever admitted to the S&P 500, the same index that tracks billions of dollars of passive investing and is found in millions of U.S. retirement accounts. COIN stock had already jumped about 24% on the day of the announcement, and as of June 2025, it was the best-performing component of the index.
This milestone came almost exactly two years after the SEC took Coinbase to court in one of the most significant enforcement actions in crypto history, a case the agency ultimately dropped without any penalties, with no required changes to Coinbase’s business, and with an estimated $50 million per year in legal fees 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 in America’s most prestigious stock index. So what really happened between June 2023 and May 2025, and what does this mean for future crypto regulation?
COINBASE-SUPPORTED CRYPTO GROUP URGES SENA TO PASS CLARITY ACT
Stand With Crypto, an advocacy group launched by Coinbase, says more than 200 organizations have sent a letter to the U.S. Senate urging lawmakers to introduce the CLARITY Act without delay. pic.twitter.com/y8NcxJE2HN
– Coin Bureau (@coinbureau) June 8, 2026
COINBASE-SUPPORTED CRYPTO GROUP URGES SENA TO PASS CLARITY ACTThe Coinbase SEC Crypto Lawsuit Explained: What the Case is Really Alleged to Do
The SEC’s lawsuit against Coinbase, filed June 6, 2023, likens 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 national securities exchange, broker-dealer, and clearing agency, as well as offering unregistered securities through its staking-as-a-service product.
The agency’s main argument is that several tokens listed on Coinbase, including SOL, ADA and MATIC, are US law securities based on the Howey test, which requires investment in a joint enterprise with an expectation of profit.
If the SEC’s view prevails, Coinbase’s business model could be fundamentally altered. Following a prior notice from Wells indicating enforcement action, COIN shares fell approximately 12% on the day the complaint was filed.
CEO Brian Armstrong and General Counsel Paul Grewal responded, saying crypto tokens do not meet 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 an eye
Big month @Coinbase:
– First company to offer global crypto options and pers in the US in a compliant manner
– Official USDC Cash Deployer for @HyperliquidX
– Gold and silver criminals now live outside the United States (soon to be in the United States)
– Partnering with Standard Chartered to expand globally…— Brian Armstrong (@brian_armstrong) June 3, 2026
The legal battle played out in distinct phases, each shifting the odds in ways that were not evident in real time.
June 2023 – The trial lands. The SEC files in the Southern District of New York. Coinbase says it will fight rather than settle, a strategic choice that sets it apart from several other crypto companies that have reached deals with regulators during the same period.
March 2024 – A court ruling goes both ways. On March 27, 2024, Judge Katherine Polk Failla largely sided with the SEC at oral argument, ruling that the agency had correctly alleged that several tokens on Coinbase and its staking program involved securities transactions. The judge rejected only the SEC’s more narrow request regarding Coinbase Wallet. The ruling kept the case alive and left a significant cloud of legal uncertainty over Coinbase heading into an election year.
January 2025 – The tide begins to turn. Two developments came in rapid succession. The Third Circuit Court of Appeals ruled that the SEC’s rejection of Coinbase’s 2022 request for crypto-specific rulemaking was “conclusive and insufficiently reasoned,” signaling to the agency that it couldn’t just say no without a real explanation. Separately, the SEC quietly reassigned the lead attorney handling its crypto enforcement cases, including the Coinbase case, to an internal IT-related role — a move widely interpreted by legal experts as a signal that the agency’s aggressive enforcement posture was fading.
February 27, 2025 – Dismissal with prejudice. Under new leadership at the SEC and a clear policy shift away from enforcement-first crypto regulation, the agency filed a joint stipulation to dismiss the case at SDNY. The SEC’s own filing said the dismissal was “not based on any assessment of the merits of the claims” – an explicit acknowledgment that this was a political decision, not a defeat in court. No penalty. No operational changes required. The matter was over. Coinbase estimates this would save more than $50 million per year in legal fees. The broader shift in crypto regulation toward legislative frameworks such as the CLARITY Act helped reshape the environment in which the SEC operated.
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S&P 500 and Zero Penalties: What Coinbase’s Victory Really Means for Crypto Regulation
(SOURCE: Yahoo Finance)
A cursory reading of Coinbase’s history suggests that it lucked out with a change in administration 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 case that challenged the SEC’s enforcement approach.
Manatt noted that the failure of the Coinbase SEC lawsuit and the suspension of a related case against Binance signified a shift from adversarial litigation to cooperative policymaking when it comes to regulating digital assets. The SEC’s strategy of using the Howey test against the stock exchanges has been shelved for now.
Coinbase’s inclusion in the S&P 500 on May 19, 2025 marked a milestone, providing millions of Americans indirect exposure to crypto through their retirement accounts. CEO Brian Armstrong saw this as evidence of widespread acceptance of digital assets.
However, challenges remain, including an ongoing SEC investigation described as a landmark probe and a private trial focused on regulatory misrepresentations. While the SEC’s new crypto task force moves toward rulemaking, a comprehensive regulatory framework is still lacking. Coinbase is strategically expanding into new markets, leveraging legal developments to increase its presence.
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The article From Crypto SEC Lawsuit to S&P 500: How Coinbase Won Its Three-Year Regulatory War appeared first on 99Bitcoins.
