- Vermont has dropped its case against Coinbase regarding its staking services, following the SEC’s earlier dismissal of its own lawsuit.
- The state cited new federal regulatory guidance and the formation of a crypto-focused SEC task force as reasons for withdrawing its “show cause order.”
- Coinbase’s Chief Legal Officer celebrated the decision, maintaining that “staking services are not securities” and urged other states to follow Vermont’s example.
Vermont has become the latest regulatory authority to withdraw legal action against Coinbase, dismissing its case challenging the legality of the exchange’s cryptocurrency staking services. This development marks another significant victory for the major crypto platform following the Securities and Exchange Commission’s recent decision to drop its broader lawsuit against the company.
Paul Grewal, Coinbase’s Chief Legal Officer, publicly celebrated Vermont’s decision on social media platform X, stating: "As we have always said: staking services are not securities. We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets." Grewal also encouraged other states with pending actions to "take a page from Vermont’s playbook."
The legal retreat comes amid shifting regulatory winds following the transition to President Donald Trump‘s administration. Vermont authorities explicitly referenced the SEC’s earlier case dismissal and the formation of a new SEC task force focused on cryptocurrency regulation in their withdrawal filing.
"In light of the dismissal of the Federal Action and likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice," stated the Vermont regulatory body in its Thursday filing.
The dispute originated in June 2023 when Vermont and ten other states issued show cause orders—legal directives requiring Coinbase to explain why its staking services should not be halted—alleging violations of securities laws. These state actions closely followed the SEC’s now-dismissed lawsuit that had accused Coinbase of operating as an unregistered exchange, broker, and clearing agency.
Cryptocurrency staking allows users to earn Passive income by committing their tokens to support blockchain network operations. Regulators had previously argued these arrangements constituted investment contracts that required proper securities registration.
The regulatory environment for cryptocurrency has notably shifted under the leadership of Mark Uyeda, the SEC’s acting chair, who has demonstrated a more permissive approach compared to his predecessor, Gary Gensler. This policy shift has resulted in the dismissal of multiple high-profile cases against crypto entities including Binance, Kraken, and OpenSea.
Coinbase’s legal victory potentially signals a broader regulatory recalibration that may provide clearer operational guidelines for cryptocurrency businesses in the United States. The company continues to maintain that staking services fundamentally differ from securities and should not be regulated as such.
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