Coinbase users in four US states will no longer be able to use staking services.
Coinbase, a renowned cryptocurrency exchange based in the United States, has suspended its staking services in four states California, New Jersey, South Carolina, and Wisconsin.
Following a lawsuit filed by the US Securities and Exchange Commission (SEC) on June 6th, accusing the crypto exchange of dealing in unregistered securities, Coinbase encountered subsequent legal challenges from ten US states.
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On July 14th, the crypto exchange Coinbase issued a separate blog post commenting on the situation:
We strongly disagree with any allegation that our staking services are securities. But we will fully comply with the preliminary state orders where required, even though that comes before we’ve had an opportunity to defend ourselves.
Coinbase has stated that only the regulatory activities in California, New Jersey, South Carolina, and Wisconsin necessitate the halt of adding more assets to staking.
Conversely, customers located in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington remain "qualified to stake crypto as they had been previously."
This decision comes in the wake of the first pre-motion hearing in the SEC's case against Coinbase. The commission initiated the lawsuit on June 6th, accusing Coinbase of acting as an unregistered security broker since 2019. Coinbase has largely dismissed all such allegations.
Regulators at the state and federal levels have pursued other cryptocurrency firms for their staking services, alleging violations of securities laws.
Earlier in February, the SEC reached a $30 million settlement with Kraken, necessitating the cessation of its staking services or programs for US clients.
The suspension of staking services by Coinbase in these four states highlights the continued tension between crypto service providers and regulatory bodies, underscoring the critical importance of legal compliance in the ever-evolving world of cryptocurrencies.
