Kentucky Drops Lawsuit Against Coinbase Over Staking Services
Kentucky's Department of Financial Institutions has dropped its lawsuit against Coinbase, which had accused the crypto exchange of violating local securities laws by offering digital asset staking services to investors in the state.
The case was dismissed “without prejudice” allowing Kentucky authorities to revisit the matter in the future if needed.
In response to the dismissal, Paul Grewal, Chief Legal Officer at Coinbase, called on Congress to create a federal crypto regulatory framework, aiming to replace the current patchwork of state-by-state litigation. Grewal suggested this would help avoid the ongoing legal challenges faced by crypto companies operating in multiple states.
Similar Cases Dropped by Other States
Kentucky’s action follows Vermont’s decision on March 14 to drop its lawsuit against Coinbase, with South Carolinaalso following suit shortly after. However, seven states, including Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin, continue to pursue legal cases against the crypto exchange related to its staking services.
Coinbase and SEC Legal Developments
These staking lawsuits are part of a broader regulatory initiative alongside a federal action by the SEC. The SEC sued Coinbase in June 2023 for allegedly violating securities laws by offering unregistered securities.
In February 2024, the SEC dropped the case, marking a significant win for Coinbase and the broader crypto industry. The SEC has since become less aggressive under new leadership, also dismissing cases against other crypto firms like Kraken and Robinhood.
Kentucky’s ‘Bitcoin Rights’ Bill
Kentucky’s legal shift coincides with Governor Andy Beshear’s signing of the “Bitcoin Rights” bill, which protects self-custody, supports crypto mining, and allows for crypto payments. The bill also restricts local regulators from unfairly targeting crypto assets, offering exemptive relief for mining and staking services, further bolstering the state’s crypto-friendly environment.
In summary, while some states continue to pursue legal action against Coinbase, recent developments indicate a shift toward greater regulatory clarity, particularly as crypto-friendly legislation gains ground in states like Kentucky.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a "detective-like" mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
