The U.S. State of Vermont announced on March 13 that it had dismissed its “show cause order” case against the Coinbase exchange “without prejudice.” Grewal pointed out that the Coinbase team applauds Vermont for embracing progress and providing clarity for its citizens who own digital assets.
Grewal stated that while the work of Coinbase’s legal team was far from over, Congress must seize the bipartisan momentum currently seen across the House and Senate to pass inclusive legislation that takes into account the novel features of digital assets, such as staking. He added that the other states with staking actions should “take a page from Vermont’s playbook.”
The US states of Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Washington, and Wisconsin also launched cases against Coinbase in 2023.
Vermont’s decision came just weeks after the U.S. SEC decided “in principle” to revoke its own case against Coinbase, pointing to a shift in the regulatory aspects of the crypto industry under President Trump’s administration. The formation of the new U.S. SEC’s task force to “provide guidance for the promulgation of rules regarding the regulation of crypto products and services” was cited as a major influencing factor in Vermont’s decision to drop its case against Coinbase.
Vermont rescinds crypto staking case against Coinbase ‘without prejudice’
Today the State of Vermont dismissed its action against @Coinbase regarding staking services. As we have always said: staking services are not securities. We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets. 1/3
— paulgrewal.eth (@iampaulgrewal) March 13, 2025
The Securities Division of the Vermont Department of Financial Regulation rescinded the pending show cause order against Coinbase “without prejudice.” The division believes it would be most efficient and in the best interests of justice to revoke the pending show cause order in light of the dismissal of the U.S. SEC’s lawsuit and the likelihood of new federal regulatory guidance.
The show cause order asserted that Coinbase was violating securities laws by offering staking services to its users without a license and demanded the exchange provide a reason why the courts should not serve the crypto exchange with an order directing them to halt the service.
“While dismissal will be a major win for the rule of law – and a clear vindication of our position – most of all it will be a win for the entire industry and the 52 million Americans who have owned a digital asset.”
According to Grewal, it was critical that the U.S. pass legislation that provided the long-term certainty needed for the country to lead in the crypto industry, and to ensure innovation continued in America and a rogue regulator could not weaponize the lack of clarity again.
Shirzad says staking cases never made any sense
Coinbase chief policy officer Faryar Shirzad claimed that the staking cases never made sense because weaponizing the securities laws against the industry did nothing other than harm crypto investors – the very people securities laws are supposed to protect. He added that Vermont’s decision to dismiss its case against Coinbase on staking was a constructive move, as was the Kentucky Senate’s unanimous vote (also today) to clarify that staking services were not securities.
Shirzad pointed out that a few state staking cases remained, but hopefully, the state-level attack against crypto was beginning to fade away as Congress worked on comprehensive legislation and the federal regulators–in particular, the U.S. SEC—moved quickly to provide regulatory clarity.
According to the Department of Government Efficiency (D.O.G.E), states were taking action while Washington ‘dithered’ as Vermont and Kentucky’s landmark rulings proved what markets already knew—staking was not a security. D.O.G.E noted that nearly $2.3 billion in crypto innovation was stalled by misapplied SEC rules, but state-level reforms were “cutting through red tape.”
Notably, 47 states now had crypto-friendly frameworks while Congress sat on 12 different bills, including FIT21, which failed to address core regulatory overreach. D.O.G.E asserted that real reform meant modernizing outdated frameworks, not adding more layers.
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