The legal battle over Coinbase’s staking services has taken a significant turn as the U.S. Securities and Exchange Commission (SEC) and five states have dropped their lawsuits against the company. This development marks a pivotal moment in the ongoing debate over the classification of staking services as securities.

In June 2023, the SEC and ten states filed lawsuits against Coinbase, alleging that its staking services constituted unregistered securities. Some states went further by issuing cease-and-desist orders, effectively halting Coinbase’s ability to offer staking services to new users. These orders were typically reserved for emergency situations, such as combating securities fraud.

Coinbase has consistently maintained that its staking services do not qualify as securities and has fought the lawsuits vigorously. The company has also engaged in efforts to educate policymakers about the benefits of digital assets and staking. As a result, the SEC dismissed its lawsuit against Coinbase with prejudice in February, and five states—Illinois, Kentucky, South Carolina, Vermont, and Alabama—have followed suit by dropping their cases.

Remaining States Continue Legal Actions

Despite these victories, Coinbase still faces legal challenges in California, New Jersey, Maryland, Washington, and Wisconsin. Four of these states continue to enforce cease-and-desist orders, which have reportedly cost residents over $90 million in missed staking rewards since June 2023. These actions have limited consumer choice and increased regulatory uncertainty.

Coinbase argues that these states are wrong in their legal interpretation, as the SEC has already dismissed its case. The company asserts that targeting only Coinbase, while other staking service providers remain unaffected, is unfair and harms consumers by reducing competition and choice.

Call for Regulatory Clarity

Coinbase emphasizes the need for clear regulatory guidelines, suggesting that staking policy should be determined by elected officials rather than through litigation. Progress is being made, with Congress working on a comprehensive framework for digital assets and the White House issuing an Executive Order to support staking activities.

As the legal landscape evolves, Coinbase remains committed to challenging the remaining lawsuits and advocating for its users. The company encourages the crypto community to support efforts to establish a legal framework that allows digital assets to thrive in the U.S.

For more details, the original announcement can be found here.

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