SEC Drops Lawsuits Against Kraken and Others, XRP Still in Limbo Though

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The U.S. Securities and Exchange Commission (SEC) has dismissed lawsuits against crypto exchange Kraken, blockchain software technology company ConsenSys, and proprietary trading firm Cumberland DRW.

This move marks a significant shift in the agency’s regulatory practices that is seen as a “turning point” for crypto’s future in the United States. Despite this positive development, XRP remains entangled in legal uncertainty.

So, let’s take a deeper look into this favorable regulatory progress the cryptocurrency space has witnessed this week, which is part of a broader positive move.

Motivation Behind Dropping the Charges

The news of the Kraken SEC case dismissed comes under the new Trump administration, which is taking a crypto-friendly regulatory approach to promote innovation and growth in the industry.

As the SEC said, the decision “rests on its judgment that the dismissal will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry.”

The charges against Kraken first came in 2023 for operating as an unregistered securities exchange, broker, dealer, and clearing agency. The ConsenSys SEC case, on the other hand, alleged the sale of securities through MetaMask Staking and acting as an unregistered broker through both Staking and MetaMask Swaps. As for the Cumberland DRW SEC case, it was for operating as an unregistered dealer in over $2 billion worth of crypto assets offered and sold as securities.

The regulator has now dismissed all three cases, a move that follows similar outcomes in cases against Robinhood, Coinbase, OpenSea, Uniswap Labs, and Crypto.com.

The SEC has also filed joint stipulations with Kraken, ConsenSys, and Cumberland DRW, permanently dismissing the cases with prejudice and preventing any future refiling. This effectively ends the regulation-by-enforcement approach that began under the Biden administration.

Shift in Policy Under New Administration

Ever since Donald Trump took office as the 47th President of the United States, he has begun delivering on promises made to the crypto industry during his campaign. This includes offering regulatory clarity through crypto-friendly policies.

The SEC’s dismissal of enforcement actions against crypto companies, under the leadership of Acting Chairman Mark Uyeda, is part of that commitment.

More importantly, the focus of the SEC under the Trump administration is on engaging with the crypto industry through task forces and roundtables. This marks a massive shift away from the “regulation by enforcement” approach taken by the SEC under Gary Gensler, who initiated several enforcement actions against crypto companies and individuals — often without providing a clear regulatory framework — which drew criticism from the industry.

In contrast, Uyeda has emphasized developing crypto policies in a practical and “more transparent manner.” Incoming SEC Chair Paul Atkins has also pledged “to provide a firm regulatory foundation for digital assets through a rational, coherent, and principled approach.”

Kraken Plans to Go Public After SEC Dismissal

Now that Kraken has put the litigation and that “uncertainty” behind it, CEO Dave Ripley said they can focus on what truly matters: “building the future of finance.”

The first step toward that future may include going public. According to a Bloomberg report, Kraken is preparing to launch an initial public offering (IPO) in early 2026. While rumors of a Kraken have circulated for years, a more favorable stance from U.S. regulators toward crypto may finally make it a reality.

Such a move would make Kraken the only crypto firm to go public after Coinbase, which debuted in April 2021 under the ticker COIN. Its competitor’s direct listing was a roaring success, with Coinbase going public at a valuation of nearly $100 billion.

As one of the oldest Bitcoin exchanges, a successful Kraken IPO will further validate crypto exchanges as mainstream financial institutions and boost confidence in the crypto market.

XRP Still Facing Legal Challenges

While the SEC has dropped its lawsuits against several major crypto firms, Ripple continues to face uncertainty.

The agency first sued Ripple in 2020, alleging that its sales of XRP constituted an unregistered securities offering. Since then, Ripple has secured multiple victories against the regulator in the courtroom.

This includes Judge Analisa Torres ruling that XRP, in itself, is not a security, while distinguishing between institutional sales, which were considered unregistered securities offerings, and programmatic sales on exchanges, which were not. The SEC appealed the ruling even after Gensler’s resignation.

Now, while the SEC is dismissing cases against a growing number of crypto firms, it has yet to clear Ripple. This means the XRP situation remains unresolved.

So, is XRP still a security in 2025? Well, we have yet to get an XRP legal status update.

Having said that, things may soon change as the SEC has already agreed to drop the appeal, and as Fox Business reporter Eleanor Terrett noted, the Ripple case is different from others.

“The SEC now has to go to the Southern District and ask Judge Torres to lift the standard injunction. Once that is done, they can vote on everything at once, including the withdrawing of the appeal,” she added.

The Impact of Regulatory Changes on the Crypto Market

This year, under the Trump administration, the U.S. crypto regulation has undergone a massive shift.

By signing an executive order to strengthen America’s leadership in digital financial technology, President Trump established the first crypto czar and created a crypto task force to advise on pro-innovation policy.

Moreover, the SEC repealed controversial crypto accounting rules for banks and the FDIC has eliminated the rule requiring banks to get pre-approval before engaging with crypto-related activities.

All these positive crypto regulatory changes will remove legal uncertainties, increase legitimacy, and boost investor optimism and confidence. This would foster a more stable and innovative environment that could attract both institutional and retail investors, driving market growth.

An EY-Parthenon and Coinbase survey of over 350 institutional investors, conducted right after the election, actually revealed that 83% of participants intend to increase their crypto allocations, driven by the expectation of regulatory clarity around digital assets.

This mature regulatory landscape, meanwhile, would allow cryptocurrency exchanges like Binance, Coinbase, and Kraken to better compete with traditional players, gain broader acceptance, and reach a bigger audience.

What’s Ahead for Crypto Exchanges?

With positive regulatory developments paving the way for increased legitimacy and growth, the future of crypto exchanges like Kraken looks promising. But of course, navigating the compliance complexities and addressing inherent market challenges like security will be key to success.

An encouraging regulatory environment would mean greater opportunities for both exchanges and their traders through increased competition, market expansion, diverse offerings, broader adoption, global integration, and an overall smoother experience!