Vermont has officially discontinued its legal proceedings against Coinbase, which had alleged that the cryptocurrency exchange was providing unregistered securities through its staking program.
In a court document submitted on March 13, the Vermont Department of Financial Regulation indicated that this choice aligns with a parallel action taken by the US Securities and Exchange Commission (SEC).
The agency recognized that the SEC’s recently established cryptocurrency task force will be pivotal in determining forthcoming policies regarding digital assets. Consequently, Vermont has opted to withdraw while it awaits clearer regulatory directives.
The filing stated:
“Given the dismissal of the Federal Action and the potential for new federal regulatory guidance, the Division feels it would be most effective and serve the interests of justice to withdraw the pending Show Cause Order, without prejudice.”
Vermont was among ten US states, including Alabama, Illinois, Kentucky, Maryland, and New Jersey, that initiated legal action against Coinbase in 2023. These states contended that the exchange’s staking services fell under the legal definition of securities according to their laws.
Response from Coinbase
Coinbase’s Chief Legal Officer, Paul Grewal, expressed support for the development, stressing that it reinforces the firm’s longstanding view that staking is not a security.
Over the years, Coinbase has firmly maintained that its staking services do not qualify under securities regulations. The company asserts that staking is vital for the security of blockchain technology and does not fulfill the legal criteria established by the US Securities Act or the Howey Test.
The exchange further highlighted that staking is essential for the operation of many blockchain platforms, providing security, decentralization, and environmental advantages.
Grewal remarked:
“Our efforts are not finished. Congress must capitalize on the bipartisan momentum we are witnessing across both the House and Senate to enact comprehensive legislation that considers the unique attributes of digital assets, including staking.”
Grewal also encouraged other states with ongoing lawsuits against Coinbase to take a cue from Vermont and withdraw their claims.
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