Crypto Clash: Kentucky’s Surprising Move Against Coinbase Staking

Kentucky Ends Coinbase Lawsuit Over Staking Services

Kentucky has withdrawn its lawsuit against Coinbase, marking the third U.S. state to drop legal action against the crypto exchange in recent months. The Kentucky Department of Financial Institutions filed a dismissal on March 31, ending its case that accused Coinbase of offering unregistered securities through its staking program.

Following this move,Coinbase’s Chief Legal Officer,Paul Grewal,called for federal clarity on X.He urged Congress to create a federal market structure law to avoid a state-by-state litigation approach.”We need a unified federal law to end this chaos,” Grewal stated.

Kentucky’s decision follows similar moves by Vermont and South Carolina. Vermont backed out on March 14, citing the need for clearer nationwide rules. the U.S. Securities and Exchange Commission (SEC) set a precedent when it dropped its lawsuit against Coinbase on February 27. The SEC aimed to rethink crypto regulation. south Carolina and Vermont also dismissed thier cases, with Grewal noting that local users lost about $2 million in staking rewards due to the ban. Within hours, staking was live again in South carolina. The SEC’s dismissal of its federal case influenced these decisions. The SEC’s action aimed to reshape crypto regulation.

Ten states initially targeted Coinbase in June 2023. Thay argued that the exchange’s staking program was an unregistered securities offering. Users earn rewards by delegating tokens, which regulators saw as problematic. Now, seven states still have pending actions against Coinbase.

Kentucky’s move came shortly after Governor Andy Beshear signed the “Bitcoin rights” bill. This law protects self-custody rights and supports blockchain activities. A proposal to allocate up to 10% of excess reserves into Bitcoin is under consideration.

South Carolina dismissed its case days after Vermont. Grewal highlighted the need for federal intervention. “Congress must act quickly,” he emphasized. The SEC’s voluntary dismissal on February 27 paved the way.The SEC’s shift supports a broader regulatory rethink. The “Bitcoin Rights” bill secures self-custody rights and shields mining operations. This bill allows residents to run blockchain nodes without restrictions.

Seven states, including California and New Jersey, still have pending actions. The bill secures crypto rights and shields mining operations.This shift reflects a growing push for federal oversight. The SEC’s action influenced other states. The bill promotes crypto-friendly policies. It allows residents to run blockchain nodes and protects mining operations.

Staking services resumed in South Carolina after the lawsuit ended. The SEC’s decision impacted other states. The SEC’s move aimed to reshape crypto regulation.