Kentucky Drops Lawsuit Against Coinbase Over Staking Services
Kentucky has decided to drop its lawsuit against Coinbase over staking services, making it the third U.S. state to withdraw legal action against the popular exchange in recent months. This decision was formalized on March 31 when the Kentucky Department of Financial Institutions filed a joint stipulation of dismissal, officially putting an end to the case that alleged Coinbase was offering unregistered securities through its staking program.
In response to this development, Coinbase’s Chief Legal Officer, Paul Grewal, emphasized the need for federal clarity on cryptocurrency regulations. He took to social media to call on Congress to establish a federal market structure law to eliminate the current patchwork of state-by-state approaches.
Kentucky’s decision to drop the lawsuit follows similar actions taken by Vermont and South Carolina. Vermont withdrew its case on March 14, citing the need for clearer nationwide rules following the dismissal of the U.S. Securities and Exchange Commission’s federal case against Coinbase. The SEC itself set the precedent by voluntarily dropping its lawsuit against the exchange on February 27, as part of its broader efforts to reassess its approach to crypto regulation.
South Carolina also followed suit and dismissed its case shortly after Vermont, prompting Coinbase to reinstate staking services in the state. This move came after local users reportedly lost around $2 million in staking rewards during the ban period.
While Kentucky, Vermont, and South Carolina have ended their legal actions against Coinbase, seven states, including California, New Jersey, Illinois, Washington, Alabama, Maryland, and Wisconsin, still have pending cases against the exchange.
Interestingly, Kentucky’s decision to drop the Coinbase lawsuit coincided with Governor Andy Beshear signing the state’s “Bitcoin Rights” bill into law. This legislation ensures residents’ rights to self-custody of their cryptocurrency, allows for blockchain node operation, and protects mining activities from discriminatory regulations.
Furthermore, lawmakers in Kentucky are considering a separate proposal that would authorize the state to allocate up to 10% of its excess reserves into Bitcoin, signaling a growing acceptance and integration of cryptocurrencies within the state’s regulatory framework.