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- The SEC has officially dropped its lawsuit against Dragonchain, marking a significant shift in its approach to cryptocurrency regulation.
- Dragonchain’s DRGN token surged over 100% following the SEC’s decision to dismiss the unregistered securities case.
- The dismissal aligns with the SEC’s new Crypto Task Force initiatives, signaling a move towards clearer regulatory frameworks for digital assets.
A significant regulatory change has occurred as the U.S. Securities and Exchange Commission (SEC) abandoned its legal action against blockchain project Dragonchain. This strategic move signals a national security-type shift where the regulatory agency favors cooperative relations with blockchain enterprises instead of crackdowns.
SEC’s Strategic Shift in Crypto Regulation
A joint request for dismissal was submitted by the SEC and Dragonchain to an ongoing court case, according to journalist Eleanor Terrett, who worked at CryptoAmerica and served at Fox Business. In 2022, the regulator pursued Dragonchain through legal action by alleging the exact running of unregistered securities through their ICO from 2017. The SEC declared that the DRGN token of Dragonchain fulfilled the security criterion defined by the Howey test in 2017.
During this year, the SEC stopped several legal proceedings against major crypto organizations, including Dragonchain. Companies including Coinbase and Binance, Ripple Rob,inhood Uni, swap, and OpenSea received reduced legal pressure from the SEC in recent months. Last month, Ripple announced that the SEC had withdrawn from its active lawsuit against the company.
Dragochain was abandoned by the SEC right after the regulatory body established its Crypto Task Force earlier this year. Created in January 2023, the new task force changed its strategy to participate in dialogue by conducting multiple meetings with business organizations. The meetings established a better understanding of digital asset law enforcement through federal securities regulations while providing enhanced regulatory control.
SEC Chair Paul Atkins received extended attention after speaking to the crypto industry at the agency’s third roundtable about crypto trading. The meeting took place during ET hours from 1:00 to 5:00 p.m., marking the first large-scale discussion about crypto since Atkins became SEC Chair in December. The public comments from SEC Chair Paul Atkins will provide a deeper understanding of how his organization approaches supervising cryptocurrency markets.
Crypto Community Reacts to SEC’s Surprising Reversal
The cryptocurrency community registered positive feedback about the SEC’s surprise reversal after interpreting it as a signal of regulatory change. Agents within the agency believe dialogue signals innovative opportunities and adherence to regulatory standards.
This strategic change will establish foundational conditions for the United States to enact predictable digital asset oversight for operating companies in its jurisdiction. Business stakeholders expect official guidelines to replace the regulatory uncertainty that court-derived authorities generate.
Future policy impacts will direct broader regulatory development as lawmakers and agencies adjust their practices to digital financial changes.
Dragonchain experienced a significant shift when the SEC abandoned its legal battle against the company and sent powerful impacts across the cryptocurrency sector. The industry pays close attention to potential permanent regulatory changes as the agency adopts its new engagement-based strategy.
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