Leading cryptocurrency exchange Coinbase is calling on regulators in California, New Jersey, Maryland, Washington, and Wisconsin to end their ongoing lawsuits over the company’s staking services, warning that the actions are harming consumers and stifling innovation.
In a blog post published this week, Coinbase emphasized that while most state and federal regulators have moved away from aggressive legal action against staking services, a handful of states are continuing to pursue litigation that Coinbase believes is outdated and counterproductive.
$90 Million in Lost Rewards for Consumers
According to Coinbase, residents in the five states still enforcing cease-and-desist orders have missed out on more than $90 million in staking rewards since June 2023. Staking allows cryptocurrency holders to earn passive income by participating in the security and operation of blockchain networks, and Coinbase contends that barring access to such services denies consumers a significant financial opportunity.
The exchange noted:
“The SEC and ten states sued Coinbase, alleging that our staking services were securities. Several of those states went even further by issuing cease-and-desist orders that immediately prevented Coinbase — and only Coinbase — from staking new assets for users.”
In contrast, other exchanges such as Kraken and Binance.US have resumed offering staking services in various jurisdictions, further highlighting what Coinbase sees as regulatory inconsistency.
Regulatory Direction and Consumer Protection
Coinbase argues that the ongoing lawsuits are increasingly out of step with the broader regulatory direction, particularly as staking services have gained acceptance in many jurisdictions without further legal action.
“Continued litigation by the holdout states is more indefensible than ever,” the blog stated. “These lawsuits don’t protect consumers – they confuse them and expose them to greater risk.”
Coinbase asserts that without access to regulated and transparent staking services, consumers may be driven toward riskier, less secure platforms operating outside the oversight of U.S. authorities.
Oregon Joins the Fray
Meanwhile, Coinbase faces new legal challenges from Oregon Attorney General Dan Rayfield, who recently filed a lawsuit against the exchange. Rayfield alleges that Coinbase violated Oregon’s securities laws by failing to adequately protect consumers from unregistered and risky cryptocurrencies.
Paul Grewal, Coinbase’s Chief Legal Officer, criticized the Oregon lawsuit, describing it as a “copycat” of earlier SEC actions that have largely been abandoned.
“It recycles arguments the federal agency has already abandoned,” Grewal stated, adding to Coinbase’s position that regulators should modernize their approach rather than repeating past enforcement strategies.
Broader Context: Coinbase’s Push for Clearer Policies
The move by Coinbase to push back against ongoing state-level lawsuits aligns with its broader campaign for clearer cryptocurrency regulations in the U.S. Recently, Coinbase also called for policy changes that would allow SEC employees to hold cryptocurrency, arguing that increased personal exposure to the asset class among regulators could foster a more informed and balanced approach to policymaking.
As legal battles continue to unfold, Coinbase remains adamant that consistent, consumer-friendly regulation is essential for the sustainable growth of the digital asset ecosystem in the United States.
