“Case dismissed,” tweeted the chief legal officer of cryptocurrency exchange Coinbase on Friday. “Two words that every defendant in every case yearns to hear.”

The decision by the Securities and Exchange Commission to drop its lawsuit against Coinbase heralds a new era for digital assets: After years of what critics decried as “regulation by enforcement,” lawmakers are finally poised to write some rules for the industry.

Joe Biden’s SEC chairman, Gary Gensler, brought 100-plus crypto-related actions during his tenure. Many were still wending their way through the courts on Inauguration Day, but the Coinbase lawsuit held special significance because of how it tested a basic theory about the blockchain’s biggest players: that nearly all cryptocurrency tokens are securities — financial instruments such as stocks and bonds — so the platforms on which they’re traded are operating illegally unless they register as securities exchanges.

Many in the crypto market worried that a win for this idea would mean they’d find themselves subject to rules that weren’t written for them — and that, they claim, are functionally impossible to follow. Indeed, the crypto community hated Gensler so........

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