South Carolina is the latest U.S. state to drop its lawsuit against Coinbase over its staking services following Vermont’s lead.
The lawsuit had accused the exchange of offering unregistered securities. However, On March 27, the cryptocurrency exchange and the South Carolina Attorney General’s securities division formally agreed to dismiss the lawsuit.
South Carolina follows Vermont’s lead and dismisses its staking lawsuit against Coinbase
Recently, South Carolina became the latest U.S. state to drop its lawsuit against cryptocurrency exchange Coinbase for its staking services. Earlier, the U.S. state claimed that the exchange sold unregistered securities.
On March 27, Paul Grewal, Coinbase’s chief legal officer, announced on X that South Carolina dropped its staking lawsuit against Coinbase due to insufficient evidence, following Vermont’s lead.
Vermont and South Carolina are among the 10 U.S. states that sued Coinbase’s staking services on June 6. The federal securities regulator also filed a lawsuit against the crypto exchange on the same day.
However, on February 27, 2025, the Securities and Exchange Commission formally dismissed that lawsuit. Like South Carolina and Vermont, eight other U.S. states that filed enforcement actions included Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin.
Due to the lawsuit, Grewal stated that South Carolina residents lost an estimated $2 million in staking rewards.
He continued to say that the 52 million Americans who own crypto deserve clear rules and commonsense consumer protections. He also praised South Carolina for upholding justice and expressed hope that other states with staking bans would take notice.
Concurrently, a state lawmaker has introduced the “Strategic Digital Assets Reserve Act of South Carolina,” which could allow the state treasurer to allocate up to 10% of certain state funds to cryptocurrencies like Bitcoin.
In contrast to most U.S. state crypto reserve bills, North Carolina’s House Bill 4256, introduced by Rep. Jordan Pace, specifically references Bitcoin multiple times in establishing the Strategic Digital Assets Reserve.
The bill permits South Carolina’s treasurer, Curtis Loftis, to create a Bitcoin reserve capped at 1 million BTC—a threshold similar to what the U.S. federal government aims to reach or exceed with its newly established Strategic Bitcoin Reserve.
The treasurer would also have the authority to allocate Bitcoin to the state’s General Fund, the Budget Stabilization Reserve Fund, and other managed investment funds.
Vermont follows the SEC’s example and drops its staking lawsuit against Coinbase
In an order dated March 13, Vermont’s Department of Financial Regulation stated that it would dismiss the lawsuit against Coinbase without prejudice after the U.S. Securities and Exchange Commission withdrew its case on February 28.
The SEC sued Coinbase, accusing the exchange of breaking securities laws by allowing users to stake without a license.
The department stated that the SEC has created a new task force to provide guidance for promulgating regulations about controlling cryptocurrency products and services.
Additionally, the department clarified, “In light of the dismissal of the Federal Action and the likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice.”Â
The order had required Coinbase to justify why the courts should not shut down its staking service.
In a statement to X on March 13, Paul Grewal said that the other states with staking actions should learn from Vermont’s example since the state decided to opt-out.
