SEC Drops Case Against MetaMask Developer in Major Crypto Policy Shift

The U.S. Securities and Exchange Commission (SEC) has dismissed its lawsuit against Consensys, the developer of popular cryptocurrency wallet MetaMask, marking another significant reversal in the agency’s approach to cryptocurrency regulation. This dismissal comes amid a broader trend of the SEC dropping enforcement actions against crypto companies following leadership changes within the commission. Industry insiders view these developments as signaling a fundamental shift in the regulatory landscape for digital assets in the United States.

Consensys CEO and Ethereum co-founder Joseph Lubin expressed relief about the decision, stating that while the company “was committed to fighting this suit until the bitter end,” they “welcome this outcome.” Lubin added that he now hopes to “get 100% back to building” and predicted that 2025 would be “the best year” for both Ethereum and Consensys, according to DailyCoin.

Part of a Broader Regulatory Shift

The Consensys case dismissal represents the sixth enforcement action dropped by the SEC in recent weeks, highlighting a dramatic change in the agency’s approach to cryptocurrency regulation. Just hours before this announcement, the SEC had reached agreements with TRON and Gemini, further demonstrating the commission’s changing stance under new leadership.

This policy reversal began taking shape in mid-2024 when the SEC dropped its investigation into Ethereum, and has accelerated following the appointment of Mark Uyeda as acting chair of the commission in January 2025. Since then, the agency has embraced a more collaborative approach with the cryptocurrency industry, soliciting input on forthcoming regulations and moving quickly to dismiss ongoing lawsuits and investigations, according to DL News.

On the same day as the Consensys announcement, the SEC also confirmed it had dropped its lawsuit against Coinbase, one of the largest cryptocurrency exchanges in the United States. This cascade of case dismissals signals a comprehensive reevaluation of the SEC’s enforcement strategy regarding digital assets.

The Original Allegations

The SEC sued Consensys in June 2024, alleging that its MetaMask Swaps service, which allows users to exchange cryptocurrencies within the wallet application, was operating as an unregistered broker of securities. The agency had also claimed that MetaMask had sold unregistered securities on behalf of liquid staking services Lido and Rocket Pool.

These allegations were part of a broader regulatory approach under former SEC Chair Gary Gensler, who maintained that most cryptocurrencies should be classified as securities similar to stocks and bonds. Under Gensler’s leadership, the SEC pursued dozens of enforcement actions against crypto companies and executives for alleged fraud, market manipulation, and registration violations.

A Consensys spokesperson revealed to DL News that fighting the SEC’s lawsuit had cost the company “tens of millions of dollars.” Bill Hughes, senior counsel at Consensys, emphasized the company’s determination in the matter, stating, “We were never going to settle. We were going to fight this until victory or, less likely, defeat.”

New SEC Leadership and Direction

The wave of case dismissals follows significant leadership changes at the SEC. After Donald Trump named Commissioner Mark Uyeda as the SEC’s acting chair on January 21, the agency quickly pivoted toward a more crypto-friendly stance. Commissioner Hester Peirce, often referred to as “Crypto Mom” for her supportive stance on digital assets, now leads the agency’s month-old Crypto Task Force, which is charged with developing new regulations for crypto assets.

The task force appears to be central to the SEC’s new approach. In explaining the dismissal of the Coinbase lawsuit, Peirce specifically cited the pending work of this group as the rationale behind the decision, suggesting that the agency is prioritizing regulatory clarity over case-by-case enforcement.

“We were optimistic that the new administration and the new SEC leadership would be taking all of these policy questions and legal questions in a more productive, collaborative direction,” Hughes told DL News. “In my view, starting in mid-November the question was how and when these cases would be more or less peacefully resolved, as opposed to if.”

Timing and Strategic Considerations

Some industry observers have speculated about the timing of these case dismissals. Former SEC attorney and crypto critic John Reed Stark suggested to DL News that the SEC might be attempting to resolve outstanding crypto cases before the likely confirmation of Paul Atkins as permanent chair, due to upcoming filing deadlines.

“Otherwise, the SEC would have to state in a court pleading that digital assets are securities, which is anathema to the ethos of Uyeda and Peirce,” Stark explained. This perspective highlights the significant philosophical shift occurring within the commission regarding how cryptocurrency assets should be categorized and regulated.

Hughes acknowledged the unusual nature of these developments but declined to speculate on the SEC’s internal decision-making process. “It’s certainly uncommon for any enforcement agency to be dropping a case whole cloth, just walking away from it,” he noted. “But this is an uncommon period, because the regulatory animosity from the previous two to three years was also uncommon.”

Market Impact

The regulatory developments appear to have had a modest but positive impact on cryptocurrency markets. Ethereum, the second-largest cryptocurrency and closely associated with Consensys, showed small gains following the announcement, trading above the $2,300 support level. According to DailyCoin, Ether was priced at $2,329 at press time, trading in a narrow channel between $2,265 and $2,376 over the previous 24 hours.

Technical indicators suggested that Ethereum might continue to consolidate in the short term, with 1-hour charts displaying narrowing Bollinger Bands. However, the improved regulatory clarity could potentially support more significant price movements in the longer term as market participants adjust to the changing regulatory landscape.

The developments are particularly significant for Ethereum, given that regulatory concerns have been a persistent headwind for the cryptocurrency. The SEC’s evolving stance may alleviate some of these pressures, especially considering that Consensys’s legal team had noted that SEC Chair Gary Gensler had previously made comments in 2018 suggesting that Ether was not a security.

Industry Reaction and Future Outlook

The cryptocurrency industry has generally welcomed these regulatory shifts, viewing them as an opportunity to operate with greater certainty in the United States market. The previous regulatory approach under Gensler had been criticized by many in the industry for pushing innovation and investment overseas, as companies sought more favorable regulatory environments.

“The new term of office at the SEC distanced themselves from the previous team’s decisions, looking to find a compromise with the biggest names in the blockchain industry,” notes DailyCoin. This collaborative approach represents a significant departure from the enforcement-first strategy that characterized the SEC’s previous stance.

As the SEC’s Crypto Task Force works to develop new regulations, the industry anticipates greater clarity and potentially more favorable operating conditions. Hughes expressed optimism about returning to Consensys’s core mission: “We welcome it ending the way it is because we can move on and do the work that we’re here to do.”