Vermont Drops Coinbase Staking Case
Vermont Drops Coinbase Staking Case Following SEC Lead
Vermont's Department of Financial Regulation has dropped its legal action against Coinbase, mirroring the Securities and Exchange Commission's (SEC) recent dismissal of its own case. The state rescinded its "show cause order," which alleged that Coinbase offered unregistered securities through its staking service.
The Department cited the SEC's February 28th dismissal and the anticipated release of new federal regulatory guidance as reasons for its decision. They stated that rescinding the order without prejudice is in the best interest of justice and promotes efficiency.
Multiple States Initially Filed Suits
This action follows a wave of lawsuits filed against Coinbase in June 2023, initially including actions from 10 states, including Vermont, Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Washington, and Wisconsin.
Vermont's show cause order asserted that Coinbase violated securities laws by offering staking services without a license. The order demanded Coinbase explain why it shouldn't be compelled to halt its staking program.
Coinbase Celebrates Vermont's Decision, Calls for Federal Clarity
Coinbase Chief Legal Officer Paul Grewal welcomed Vermont's decision, urging other states with similar pending actions to follow suit. He emphasized that staking services are not securities and applauded Vermont for bringing clarity for its citizens.
Grewal also stressed the need for comprehensive federal legislation addressing the unique aspects of digital assets, including staking. He highlighted the need for bipartisan support in Congress to achieve this.
Impact of SEC Leadership Change
The recent dismissals of several SEC cases, including those against Cumberland DRW and the ongoing resolution of the case against Ripple Labs, coincide with the departure of former SEC Chair Gary Gensler. His hardline stance on crypto is believed to have influenced many of these past enforcement actions.
Coinbase has even requested information under the Freedom of Information Act to determine the number and cost of enforcement actions brought against crypto firms during Gensler's tenure.
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