- Alabama joins Vermont and South Carolina in dropping the Coinbase lawsuit.
- Five states are still pursuing legal action over Coinbase’s staking services.
In a notable shift, the Alabama Securities Commission has formally withdrawn its lawsuit against Coinbase, marking a pause in state-level enforcement against the crypto exchange.
The suit had previously alleged that Coinbase’s staking services constituted unregistered securities offerings.
However, the regulator now points to collaborative efforts between the U.S. Securities and Exchange Commission (SEC) and the broader crypto industry to establish clearer regulatory frameworks.
Alabama and others drop Coinbase’s staking lawsuits
As revealed in a legal filing dated the 23rd of April and shared by Coinbase’s chief legal officer, Paul Grewal, the decision signals a growing openness among regulators to prioritize a balanced crypto oversight.
The filing read,
“The SEC has announced the formation of a new task force to, among other things, provide guidance for the promulgation of rules regarding the regulation of cryptocurrency products and services.”
The Alabama Securities Commission was among ten state regulators that took coordinated legal action against Coinbase in June 2023, alleging the company’s staking rewards program violated securities laws.
At the core of the dispute was Coinbase’s practice of allowing users to lock up their crypto assets in exchange for rewards, a process facilitated by the platform for a commission.
Was Alabama the only state to do so?
Although the Alabama Securities Commission has withdrawn its case against Coinbase, the crypto exchange continues to face regulatory heat in other states, most notably in Oregon.
The legal effort there has drawn criticism from pro-XRP attorney John Deaton, who called out Oregon Attorney General Dan Rayfield for what he described as flawed and damaging reasoning in the state’s case.
Meanwhile, momentum appears to be shifting in Coinbase’s favor, with five of the ten original states dropping their staking-related lawsuits.
Vermont led the way on the 13th of March, followed by South Carolina’s dismissal just weeks later on the 28th of March, signaling a gradual softening of state-level opposition to the platform’s staking program.
However, despite a growing number of states backing away from legal action against Coinbase, the exchange’s legal challenges are far from over.
This is because California, Maryland, New Jersey, Washington, and Wisconsin continue to actively pursue cases related to Coinbase’s staking services.
Remarking on the same, Grewal in his X post added,
“Five holdouts are still electing to waste taxpayer resources on lawsuits, and four of those have banned staking with Coinbase, depriving consumers of the right to earn on their platform of choice.”
What’s more to it?
However, in the end, he expressed hope that the remaining states will follow Alabama’s lead, further aligning regulatory efforts with the broader push for clearer and more constructive crypto frameworks across the U.S.
Amid these encouraging regulatory shifts, Coinbase Derivatives is preparing to launch the first CFTC-regulated, round-the-clock Bitcoin and Ethereum futures trading in the U.S., a move that underscores the company’s continued push to innovate within a maturing regulatory landscape.