Coinbase, a prominent cryptocurrency exchange based in the United States, has announced a temporary suspension of staking additional assets for customers in four states due to ongoing legal proceedings initiated by local regulators. The affected states are California, New Jersey, South Carolina, and Wisconsin.
The decision follows a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against Coinbase in June, alleging that the exchange offered unregistered securities. Subsequently, regulatory bodies in ten U.S. states began their own legal actions, prompting Coinbase to suspend certain services.
In a blog post on July 14, Coinbase expressed its disagreement with the allegations that its staking services are securities, but stated its commitment to complying with preliminary state orders even before having an opportunity to defend itself. As a result, users in the aforementioned four states will be restricted from utilizing certain staking services until further notice.
It is important to note that the pause in staking additional assets only applies to the regulators’ actions in California, New Jersey, South Carolina, and Wisconsin. Users in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington will remain eligible to stake cryptocurrencies as they did before.
Coinbase’s announcement came after the first pre-motion hearing in the SEC’s case against the exchange. Since 2019, the commission claims that Coinbase has operated as an unregistered security broker. Despite these allegations, Coinbase has strongly denied any wrongdoing.
This move by Coinbase reflects broader concerns surrounding the compliance of cryptocurrency firms with securities laws. Other exchanges, like Kraken, reached a $30 million settlement with the SEC in February, which required them to cease offering staking services or programs to U.S. clients.
As the legal proceedings continue, the outcome of these cases will have implications for the regulatory landscape of cryptocurrency exchanges and the staking services they provide. The pause in staking services in these four states highlights the efforts made by regulators to enforce compliance within the crypto industry.
Overall, Coinbase’s decision to temporarily suspend staking services in response to regulatory proceedings underscores the ongoing challenges faced by crypto exchanges in navigating legal requirements and maintaining regulatory compliance.