Coinbase Halts Staking Services in Response to Regulatory Demands in Four US States

Coinbase, a prominent cryptocurrency exchange based in the United States, has made the decision to halt the ability for customers in four states to stake additional assets, following legal actions initiated by local regulators.

In an official blog post on July 14, Coinbase announced that users located in California, New Jersey, South Carolina, and Wisconsin will be temporarily restricted from accessing specific staking services until further notice. This measure comes as a response to regulatory bodies in ten U.S. states launching their own legal proceedings after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the crypto exchange in June, accusing it of offering unregistered securities. Consequently, Coinbase has been compelled to suspend certain services.

“While we strongly disagree with any allegation that our staking services are securities,” Coinbase stated, “we will fully comply with the preliminary state orders where required, even though that comes before we’ve had an opportunity to defend ourselves.”

According to Coinbase, only the regulatory actions taken in California, New Jersey, South Carolina, and Wisconsin necessitate the pause in staking additional assets. Users residing in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington can continue to stake their crypto assets as they did before.

This announcement follows the initial pre-motion hearing in the SEC’s case against Coinbase. The lawsuit, filed on June 6, alleges that the cryptocurrency exchange has been operating as an unregistered security broker since 2019. Coinbase has staunchly denied these allegations.

The scrutiny on crypto firms providing staking services has not been limited to Coinbase. State and federal regulators have targeted other companies in the industry, claiming that such services violate securities laws. In February, Kraken, another prominent cryptocurrency exchange, reached a $30 million settlement with the SEC, which mandated the cessation of staking services and programs offered to U.S. clients.

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