Vermont follows SEC’s lead, drops staking legal action against Coinbase
Vermont’s Department of Financial Regulation recently announced the decision to rescind its “show cause order” against Coinbase, amidst allegations that the crypto exchange was offering unregistered securities via its staking service. This move comes in conjunction with the U.S. Securities and Exchange Commission’s (SEC) dismissal of its own legal case against Coinbase on February 28.
In a March 13 order, Vermont officials stated that the state would align its actions with the SEC’s recent development, expressing that the decision was made “in the best interests of justice” and due to the anticipated federal regulatory guidance that is expected to clarify the status of cryptocurrency products and services moving forward.
The original show cause order had accused Coinbase of violating securities laws by providing staking services without the necessary licensing. On the day when the SEC initiated its legal contest against Coinbase in June 2023, several other states—including Alabama, California, Illinois, Maryland, and Washington—joined the effort to take legal action against the exchange.
Following the revocation of the order, Coinbase’s Chief Legal Officer, Paul Grewal, called for other states with pending staking actions against the exchange to reconsider their positions, suggesting that they could benefit from Vermont’s example. Grewal emphasized the importance of distinguishing staking services from securities and praised Vermont for promoting clarity for its residents involved in digital assets.
As the regulatory landscape evolves, Grewal indicated that continued progress is necessary, urging Congress to capitalize on the momentum for bipartisan legislation that addresses the unique aspects of digital products and services, such as staking.
This decision by Vermont adds to a growing trend where numerous legal actions initiated by the SEC against various firms within the crypto industry are being dismissed. This shift is particularly notable in the aftermath of former SEC Chair Gary Gensler’s resignation, which followed a period characterized by a stringent regulatory stance toward cryptocurrency.
Among other firms benefiting from the current climate, Cumberland DRW has recently seen its legal case against the SEC dropped. Meanwhile, the commission is reportedly concluding its prolonged enforcement actions against Ripple Labs.
In light of these recent developments, Coinbase remains proactive in its approach, unveiling efforts to obtain clarity on the regulatory landscape through initiatives such as the Freedom of Information Act request aimed at uncovering the extent of SEC enforcement actions against cryptocurrency firms under Gensler’s leadership.
