The SEC action is actually a signal of weakness in USD. This was precipitated somewhat with the pandemic, and more so after there were financial sanctions leveled against Russia.
The reason why currency has relative strength or weakness comes from the idea of a "national balance sheet": if your nation's assets exceed its liabilities, your local currency is gaining buying power, because it can take on additional debt from other countries and therefore, when we measure it in terms of "how much a unit of currency can purchase", we are getting them at a relative discount. You don't necessarily want the currency to be strong if your economy is based on exporting, but as a net importer, the US has assumed the role of strength for some time, and a large part of its system is to "export the dollar" as the international settlement currency.
So, with the pandemic, we got a round of fiscal stimulus, inflating the currency. Not necessarily insurmountable by itself. But then Russia invaded Ukraine and the US decided to punish the action with sanctions. That prevents Russia from doing some business, but it also has a blowback to it: if the usage of USD is becoming more restricted, it becomes less appealing as a settlement currency. Many smaller countries have peeled away to alternatives, with a handful even opting to hold BTC. Therefore, dollar strength is under serious threat now. The recent bank implosions have added to that uncertainty: there is a real question, often discussed in the crypto space now, of whether USD is going to survive intact.
Under Gary Gensler's administration, the MO of the SEC has been to swing around a billy club and drum up a bunch of charges against exchanges. The charges aren't very sound in nature: they don't adhere to a consistent framework, and don't suggest cooperation with exchanges like Coinbase that have taken pains to ask for regulatory clarity.
The rationale for why that's happening now is obvious: if the overriding concern is protecting the dollar, the SEC has to burn any possible lifeboats to maintain control of its own currency.
But...if you're doing that, that's the "then they fight you" part of the story. There are several countries where an informal crypto sector has taken hold to handle payments and remittance precisely because it bypasses financial controls. In many cases, people will still prefer settlement in USD, but they can hold a stablecoin if needed.
There is a fate in which USD pulls through without falling into an inflationary spiral, but it requires the economy to do extremely well(with a mix of labor mobilization and technological improvements) so that the balance sheet is fixed and faith is restored. The market reaction in this case suggests that people don't think the US is in control of its money, and they expect the action to be toothless - and they have a point, since if an exchange goes down, they can continue holding in self-custody and wait for the market to provide alternatives.