The US Securities and Exchange Commission (SEC) has officially closed its investigations into NFT firm Yuga Labs and crypto exchange Kraken, ending cases that had been closely watched by the digital asset industry. 

The SEC did not impose any penalties or require any changes to their business models — a possible conclusion to the legal scrutiny both companies had faced.‍

Yuga Labs: No Securities Violations Found

Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC) NFT collection, confirmed that after more than three years, the SEC has closed its probe into the firm. The investigation was centered around whether the company’s NFT offerings constituted unregistered securities.

Yuga Labs responded to the closure by stating, “This is a huge win for NFTs and all creators pushing our ecosystem forward. NFTs are not securities.” The SEC’s decision comes amid ongoing regulatory debates about the classification of NFTs and their place within existing securities laws.‍

Kraken Lawsuit Dismissed with Prejudice

Similarly, Kraken announced that the SEC has agreed to dismiss its lawsuit against the exchange with prejudice, meaning the case cannot be reopened. The SEC’s legal action had accused Kraken of operating as an unregistered securities exchange.

Kraken stated that the lawsuit was dismissed with no admission of wrongdoing, no financial penalties, and no required changes to its business model. 

The exchange described the decision as a turning point for crypto regulation in the US., asserting that the SEC’s previous actions were politically driven rather than focused on investor protection.‍

Regulatory Actions Under New Leadership

Kraken attributed the SEC’s decision to changes in leadership at both the White House and the Commission, suggesting that the dismissal reflects a shift in regulatory priorities. 

The company stated that previous enforcement actions had created uncertainty in the crypto sector and that the dismissal removed legal ambiguity for its operations.‍

Impact on the Crypto Industry

The SEC’s decision to close these investigations follows a broader reassessment of crypto regulation in the US. 

The agency had previously taken a strong enforcement-based approach under its former leadership, filing lawsuits against multiple crypto firms. Critics argued that the SEC’s tactics stifled innovation and created regulatory confusion.

The SEC has not provided an official statement on the reasoning behind dropping the cases. However, the closure of these investigations removes immediate legal pressure from Yuga Labs and Kraken, two of the most prominent entities in the digital asset space.

With the SEC dropping its cases against Kraken and Yuga Labs, attention will now turn to upcoming regulatory developments, including discussions on how digital assets will be governed in the future. Meanwhile, the White House Crypto Summit on Friday is expected to provide further clarity on the direction of US crypto policy.

Read more: SEC’s crypto task force launches roundtable series on regulation