Kentucky’s financial regulatory authority has withdrawn its lawsuit against Coinbase regarding the exchange’s staking rewards program, joining the ranks of regulators from Vermont and South Carolina who have done the same.
On April 1, Kentucky’s Department of Financial Institutions collaborated with Coinbase to submit a joint stipulation for dismissal, concluding the legal action first initiated in June 2023 alongside ten other states.
Paul Grewal, Coinbase’s chief legal officer, shared on X that day, urging Congress to “end this litigation-driven, state-by-state approach with a federal market structure law.”
In June 2023, financial regulators from ten states filed comparable lawsuits against Coinbase, coinciding with the Securities and Exchange Commission’s own lawsuit against the exchange, which the SEC retracted last month.
### Seven Lawsuits Against Coinbase Still Ongoing
Currently, seven states—Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin—are continuing their lawsuits, all claiming that Coinbase has violated securities laws with its staking rewards offering.
Vermont was the first to discontinue its legal proceedings against Coinbase, with its Department of Financial Regulation issuing an order to rescind the lawsuit on March 13. This decision took into account the SEC’s February 27 move to drop its case against Coinbase, along with anticipated updates in guidance from the federal regulator.
Shortly thereafter, South Carolina’s Attorney General’s securities division followed suit, terminating its lawsuit with a joint agreement with Coinbase on March 27.
Kentucky’s move to abandon its case was swiftly followed by the signing of a “Bitcoin Rights” bill by the state’s governor, Andy Beshear, on March 24, which provides protections for cryptocurrency self-custody and exempt crypto mining from money transmission and securities regulations.
The cessation of these state-level lawsuits comes as the SEC alters its approach, having retracted or postponed several lawsuits against crypto firms initiated during the Biden administration.
Additionally, the federal securities regulator has established a Crypto Task Force aimed at engaging with the industry about the regulatory approach to cryptocurrencies.