Coinbase temporarily pauses staking services in four US states amid legal proceedings


  • Coinbase temporarily suspends staking services in four U.S. states – California, New Jersey, South Carolina, and Wisconsin – due to ongoing legal proceedings and regulatory pressures.
  • The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, alleging the exchange offered unregistered securities through its staking service.
  • Coinbase, while disagreeing with the allegations, will comply with the temporary suspension in the affected states but intends to fight the ban in court.

Coinbase, one of the leading cryptocurrency exchanges in the United States, has temporarily suspended its staking services for customers in California, New Jersey, South Carolina, and Wisconsin. The decision comes as local regulators in these states initiate legal proceedings against the exchange, demanding changes to the staking services.

The move follows a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Coinbase, alleging that the exchange offered unregistered securities through its staking service. In response, regulatory bodies in ten states began their own legal actions against Coinbase, prompting the company to comply with preliminary state orders while it awaits the opportunity to defend itself.

Coinbase strongly disagrees with the allegations that its staking services are securities, but it has decided to comply with the temporary suspension in the affected states. However, it remains committed to fighting the ban in court, emphasizing that customers across the country should have access to the same technological and economic opportunities.

Staking services and regulatory challenges

Staking involves the process of locking up cryptocurrencies to support the operations of a blockchain network. Users who hold proof-of-stake assets can pledge their tokens to the network, earning rewards in return. However, this practice has faced regulatory scrutiny as authorities question whether staking services fall within the term “securities.”

Coinbase is not the only crypto firm to face regulatory pressures regarding staking. Earlier this year, the SEC reached a $30 million settlement with Kraken, another major U.S.-based exchange, which required the company to halt its staking services for American clients due to alleged violations of securities laws.

The ongoing legal proceedings against Coinbase have reached a critical juncture, with the first pre-motion hearing recently taking place in the SEC’s case. The exchange has consistently denied the allegations and is preparing to defend itself in court. Coinbase maintains that it has operated responsibly and transparently and aims to safeguard the interests of its customers.

The impact on users and operations

 Customers in the four US states who staked their cryptocurrencies before the regulatory orders were issued will not be affected.

It is worth noting that customers residing in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington can continue to participate in staking activities without interruption.

Nonetheless, industry participants continue to call for clear and comprehensive frameworks that provide regulatory clarity while fostering innovation and protecting the interests of all stakeholders. The resolution of the Coinbase case will shed further light on the future of staking services and the broader regulatory landscape surrounding cryptocurrencies in the United States.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space. He also studies the ramifications of Web3 and blockchain development to have a stake in the future economy.

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