The Coinbase staking service has been stopped in four US states, California, South Carolina, Wisconsin, and New Jersey.
This means that crypto investors in these states are unable to leverage the exchange’s staking facilities.
Coinbase Staking – Fighting Court Cases Against 10 US States
In its blog post entitled ‘Why We Stand by Staking‘, Coinbase announced that users who staked their tokens before orders by the SEC were issued regarding the exchange – June 6 – wouldn’t be affected by this decision.
Coinbase has highlighted a condensed version of the blog via its Twitter thread.
1/ As you might have heard, on June 6, 10 US states initiated proceedings related to Coinbase’s retail staking services. Let’s dig into what this means for our customers. pic.twitter.com/pQidr0Ijc9
— Coinbase 🛡️ (@coinbase) July 14, 2023
On June 6, the SEC filed a lawsuit against Binance, alleging that the exchange was violating securities law by operating as a securities exchange without any business registration.
On the same day, 10 US states, filed their own court cases, alleging that Coinbase staking, a service that the exchange provides under its “Earn” program, are securities.
Coinbase has refuted this statement in its blog, stating that “nothing about Coinbase’s staking services is investment at all”. The exchange states that this approach is to ensure that the “crypto economy” works for everyone across the globe.
Different States – Different Laws
Coinbase has said that different states have initiated varying judicial proceedings against Binance. Some require Coinbase to limit its retail staking services as the case moves forwards.
Some states, however, have taken a lenient stance. They have provided Coinbase with more time to continue to function while the case proceeds.
Expressing its disappointment against the stringent laws, Coinbase writes:
We were disappointed to see some state regulators taking the path to limit our staking services, as we have offered to provide our services transparently, safely, and reliably for nearly four years.
California, South Carolina, New Jersey, and Wisconsin are those states. Coinbase has informed clients that these regions are demanding Coinbase change its services before the proceedings begin, which is why the exchange has decided to limit its staking service in the sour states.
How will it Impact Customers?
No Impact on Customers Who Staked Before June 6
Investors of these four states who staked their assets on the exchange before the orders won’t go through any issues. Those who were, however, must pay close attention to the help center as Coinbase will share changes it will make to staking services.
Business as Usual in Remaining States
While there is much to be done in the remaining six states – Maryland, Kentucky, Vermont, Illinois, Alabama, and Washington. Coinbase states that it will be business as usual in those states. It means that all customers from those regions will be able to use staking services.
Staking is Crucial for Crypto’s Survival – Coinbase
Coinbase continued the blog by stating that staking is crucial for the survival of crypto. The rationale it gave was about how almost every blockchain now follows a proof-of-stake model.
It continued how users are not just investors but important elements in securing the blockchain. “With four out of five Americans using digital payments, the US stands to lose from pushing staking to offshore entities where customers may be less protected.”, it said.
Coinbase has also called out to customers to “Stand with Crypto“. Stand with Crypto is a grassroots campaign by Coinbase to advocate for Pro-crypto policies. Those interested can click the given link to fill out the form and become an advocate.
Kraken’s Chief Legal Officer Paul Grewal has also come out in its support, stating that he and his team will continue to defend people’s right to stake.
We’ve safely and legally offered staking for almost 4 years. We’ve always followed legal process, and will do so here. These proceedings are just getting started – we’ll continue to defend everyone’s right to stake if and how they choose. https://t.co/vkSjiO2tjV
— paulgrewal.eth (@iampaulgrewal) July 14, 2023
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