Although half of the 10 state-level lawsuits were dismissed earlier this year, Coinbase’s staking program has continued to be prohibited in four states.
Five U.S. states continue to pursue lawsuits against Coinbase’s staking program. Company executives claim that regulators are creating barriers for users trying to earn rewards through the platform, which has generated over $90 million since 2023.
Coinbase’s chief legal officer, Paul Grewal, reported on April 25 that California, New Jersey, Maryland, Washington, and Wisconsin continue to pursue legal actions against the company’s staking services.
California, New Jersey, Maryland, and Wisconsin have issued cease-and-desist orders prohibiting Coinbase from offering staking services to new users in their states. Meanwhile, Washington state has filed a lawsuit, although it has not enforced an active ban.
Regulators launched enforcement actions after alleging that Coinbase conducts its staking services as unregistered securities offerings.
The crypto firm has contested these allegations, which argue that staking services do not meet the legal definition of securities. In February, the U.S. Securities and Exchange Commission (SEC) dismissed the staking case against Coinbase with prejudice.
Illinois, Kentucky, South Carolina, Vermont, and Alabama have also withdrawn similar lawsuits.
User Consequences and Forfeited Rewards
Coinbase’s vice president of legal, Paul VanGreck, estimated that residents of California, New Jersey, Maryland, and Wisconsin have collectively lost over $90 million in staking rewards since June 2023.
In an April 25 article, VanGreck noted that regulators had issued cease-and-desist orders against Coinbase using emergency procedures—measures typically reserved for serious securities fraud cases like Ponzi schemes—which he argued were inappropriate for routine staking activities.
He stated that the restrictions limited consumer choice and contributed to regulatory uncertainty in the broader digital asset industry.
VanGreck further emphasized that Coinbase operates under extensive federal and state regulations. The company has registered with FinCEN as a money services business, obtained 46 state money-transmission licenses, and trades publicly in the U.S., where it regularly files financial disclosures.
Additionally, the company maintains a strong security commitment, indemnifying users for any losses if Coinbase ever causes a staking failure—though such events remain highly unlikely.
VanGreck argued that the ongoing litigation pursued by the five states contrasts sharply with the broader momentum toward regulatory clarity. He pointed to ongoing efforts in Congress to establish a comprehensive digital asset framework and highlighted that regulatory bodies, including the SEC, have begun shifting toward a more balanced approach.
VanGreck further stated that elected lawmakers—not the courts—should determine staking policy, as they are responsible for establishing the legal framework governing staking services.
A commitment has been made by Coinbase to challenge the ongoing lawsuits and to safeguard user access to staking services.
