On July 14, Coinbase decided to put a temporary hold on its retail staking services in California, New Jersey, South Carolina, and Wisconsin. This decision comes in response to the individual states' requirements for alterations to the services amidst advancing legal proceedings. Despite this, cryptocurrencies already staked before these orders will not be affected.
Last month, the Securities and Exchange Commission (SEC) initiated a lawsuit against Coinbase, classifying its staking service and several listed tokens as securities. Concurrently, security agencies from ten states, including the four affected, commenced their legal actions against the exchange.
Coinbase has vehemently disagreed with the allegations and stated in a recent blog post that staking services should not be considered securities. However, the exchange has confirmed its commitment to adhere to preliminary state orders even before having the chance to defend its position.
Following these actions, customers residing in the affected states will be unable to stake additional assets through Coinbase until further notice. Nevertheless, staking services in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington will continue to operate as usual, despite ongoing legal proceedings in these states.
In defending its staking services, Coinbase argues that these services are essential to the operation of the “cryptoeconomy”, securing blockchains for millions of users worldwide. The company also states that unlike financial products, users maintain ownership of their crypto during staking, and no lending or repayment risks are involved.