YEREVAN (CoinChapter.com) — Kentucky’s Department of Financial Institutions officially ended its case against the Coinbase staking program on April 1. The dismissal was filed jointly with Coinbase, following similar moves by Vermont and South Carolina.
The Kentucky Coinbase lawsuit was one of the 11 state lawsuits against Coinbase that began in June 2023, launched the same day as the SEC lawsuit against Coinbase. The state action focused on alleged violations tied to Coinbase’s staking rewards program.
On the same day, Coinbase Chief Legal Officer Paul Grewal posted on X, stating,
“It’s time for Congress to end this litigation-driven, state-by-state approach with a federal market structure law.”
SEC Lawsuit Against Coinbase Dropped in February
The SEC lawsuit against Coinbase was officially dropped on February 27, 2024. This triggered a wave of changes across several state regulatory bodies. The Coinbase staking program was at the center of each case, with claims that it violated securities laws.
The SEC’s decision influenced how state regulators approached their own lawsuits. So far, three states have dismissed their cases within weeks of each other. The shift aligns with recent policy changes within the federal regulator.
The SEC’s Crypto Task Force has also started engaging with crypto companies to clarify future rules and enforcement strategies.
Vermont and South Carolina Ended Legal Actions in March
Vermont was the first to act. On March 13, the Department of Financial Regulation rescinded its legal action. Officials cited the SEC’s February dismissal and the expected updates to federal crypto rules.
South Carolina followed on March 27. The Attorney General’s Securities Division filed a joint dismissal with Coinbase, becoming the second state to withdraw its claims tied to the Coinbase staking program.
These dismissals highlighted a growing difference in how states are choosing to handle enforcement in the absence of unified crypto regulation.
Despite the withdrawals, seven states continue legal action. The active cases are from Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin. Each state alleges that the Coinbase staking program offered unregistered securities.
The remaining state lawsuits against Coinbase still focus on how staking services are structured and whether they fall under existing securities laws.
While three lawsuits have ended, the Coinbase staking program continues to face scrutiny at the state level.
Kentucky Passed a Crypto Rights Bill Before Dismissal
Kentucky Governor Andy Beshear signed a bill protecting Bitcoin rights just days before the dismissal. The new law was passed on March 24. It ensures the right to self-custody and excludes crypto mining from money transmission and securities laws.
The law passed one week before the Kentucky Coinbase lawsuit was officially withdrawn. It also reflects broader discussions around crypto regulation at the state level.
The Kentucky law and the lawsuit withdrawal both mark recent changes in how the state approaches digital asset oversight.
Until Congress sets a unified standard, legal responses to the Coinbase staking program will likely remain uneven across the United States.