SEC Drops Dragonchain Lawsuit: A New Approach to Crypto Regulation?

The SEC has dropped its lawsuit against Dragonchain, marking a shift away from aggressive crypto regulation. This occurs amid a broader trend as the agency halts several enforcement actions against various crypto firms. Current discussions are part of its Crypto Task Force, which is aimed at clarifying federal regulations around digital assets.

In a significant reversal, the U.S. Securities and Exchange Commission (SEC) has decided to dismiss its lawsuit against Dragonchain, a blockchain project, moving away from its previous regulatory approach. This shift was reported by Eleanor Terrett, a journalist with CryptoAmerica, previously a correspondent for Fox Business.

The SEC and Dragonchain jointly filed a dismissal request for the ongoing litigation, originally initiated in 2022. The regulator had accused Dragonchain of conducting an unregistered securities offering during its initial coin offering (ICO) in 2017, claiming the DRGN token was a security under the Howey test.

This latest decision aligns with the SEC’s current trend of easing enforcement actions against the crypto industry. Recently, the agency has paused or dropped lawsuits against various cryptocurrency firms, including notable names like Coinbase and Binance, which faced legal challenges just days apart back in 2023. Even Ripple had announced last month that the SEC was discontinuing its litigation against them.

The SEC’s ongoing Crypto Task Force, formed in January, is said to be working towards better clarity on how digital assets might fit into federal regulations. This task force is currently soliciting input from industry players through roundtables, aiming for a more collaborative regulatory environment.

Attention is now turning to SEC Chair Paul Atkins, who’s slated to speak at a roundtable event today, April 25. His remarks may reveal more about the SEC’s evolving stance on crypto regulation during the agency’s third industry roundtable since his nomination late last year. The crypto community is keen to hear what direction the SEC is heading in, as the implications could be quite broad.