Coinbase halts crypto staking in four US states
America’s largest crypto exchange, Coinbase told its customers from California, New Jersey, South Carolina, and Wisconsin that they will no longer be able to stake digital tokens on its platform until further notice.
The decision, which doesn’t affect the already staked cryptos, follows the regulatory requirements imposed by these states, which restrict staking services offered to retail users. Coinbase clarified that customers located in other states, including Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington, can continue to stake cryptocurrencies” just as they were before.”
“We strongly disagree with any allegation that our staking services are securities. But we will fully comply with the preliminary state orders where required, even though that comes before we’ve had an opportunity to defend ourselves,” Coinbase wrote in a blog post.
The move comes in the wake of a lawsuit filed by the Securities and Exchange Commission (SEC) against Coinbase over certain products. In particular, the agency is looking at aspects of Coinbase’s staking service Earn, as well as investment and custody services, and part of its spot trading business.
The SEC alleges that the listed company broke securities law by acting as an unregistered broker and failing to register as an exchange. Additionally, the agency classified Coinbase Earn’s staking program, which allows investors to earn interest on their tokens, as an unregistered security.
In a coordinated effort, regulators from 10 states also filed charges against Coinbase on the same day. These regulators argue that Coinbase’s staking services should be considered securities under state laws.
According to the complaint, Coinbase’s prime brokerage, exchange, and staking programs have been violating securities laws. The regulator detailed that the exchange has disregarded regulatory frameworks and evaded disclosure requirements mandated by U.S. securities law for a couple of years.
The SEC claims that at least 13 crypto assets offered by Coinbase, including Solana’s SOL, fall under the category of “crypto asset securities” as defined by the regulator.
Coinbase, during its public offering, disclosed the regulatory risks and the possibility that some of its products might fall under regulatory oversight. However, the SEC said that Coinbase continued to operate without fulfilling the necessary registration requirements as an exchange. Overall, this discrepancy between Coinbase’s public statements and its alleged non-compliance with registration regulations forms a key aspect of the SEC’s case against the company.
AS a result, the American exchange is looking to international markets to drive growth amid fears of the clampdown on crypto businesses in the US. Alongside its US authorisation, Coinbase also holds licenses from Italy, the Netherlands, Ireland and Germany, as well as the UK Financial Conduct Authority.
