Vermont Drops Crypto Staking Case Against Coinbase

Crypto exchange Coinbase has scored another major victory in its legal battles, as U.S. state Vermont dropped its case against the exchange over its staking services. 

Coinbase’s Chief Legal Officer, Paul Grewal, celebrated Vermont’s decision, calling it a sign of “progress.” 

“As we have always said: staking services are not securities,” he wrote on X. “We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets.” 

Grewal went on to urge other states still pursuing similar actions to “take a page from Vermont’s playbook.”

The decision follows the U.S. Securities and Exchange Commission’s (SEC) decision to dismiss its own case against Coinbase just weeks earlier, pointing to a shift in the regulatory aspects for the crypto industry under President Donald Trump’s administration.

The formation of the new SEC task force to “provide guidance for the promulgation of rules regarding the regulation of crypto products and services” was cited as a pivotal factor in Vermont’s decision to rescind its case against Coinbase.

“In light of the dismissal of the Federal Action and likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice,” a Thursday filing reads.

The legal troubles between Coinbase and state regulators date back to June 2023, when Vermont, along with 10 other states, issued a “show cause order” accusing the exchange of violating securities laws by offering staking services without proper registration. 

The 11 states argued that Coinbase’s staking services qualified as unregistered securities, prompting legal action to halt the practice in certain jurisdictions.

A “show cause order” is a legal directive requiring a party to explain why a court should not take a specific action, in this case, halting Coinbase’s staking services.

The legal actions were launched shortly after the SEC filed its own case against Coinbase, accusing the exchange of operating as an unregistered exchange, broker, and clearing agency.

The SEC, under its new acting chair, Mark Uyeda, has adopted a more lenient stance on enforcement compared to its previous leadership under Gary Gensler. 

Following the change, the SEC has dropped multiple lawsuits against crypto companies, notably Binance, Kraken, and OpenSea, among others.

Edited by Sebastian Sinclair