Key Takeaways
- Coinbase revealed that California, New Jersey, South Carolina, and Wisconsin users would be restricted from accessing certain staking services until further notice.
- Coinbase emphasized that any crypto staked by users in the4 states before the issuance of the orders on June 6 remains unaffected by the halt.
In an ongoing battle with the United States Securities and Exchange Commission (SEC) over the legitimacy of its crypto staking services, popular cryptocurrency exchange Coinbase has announced a temporary halt to customers in four states from staking additional assets. The decision comes as local regulators continue their legal proceedings against the exchange.
According to a blog post on July 14, Coinbase revealed that users in California, New Jersey, South Carolina, and Wisconsin would be restricted from accessing certain staking services until further notice. The move was triggered after the SEC filed a lawsuit against Coinbase in June, accusing the platform of offering unregistered securities. In response, regulatory bodies in 10 U.S. states initiated their own legal actions, leading Coinbase to suspend specific services.
Despite voicing its strong disagreement with the allegations made by regulators that its staking services qualify as securities, Coinbase stated that it will comply fully with the preliminary state orders, even before having an opportunity to defend itself.
The suspension only applies to staking services in California, New Jersey, South Carolina, and Wisconsin. Coinbase stated that users based in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington are unaffected by the restrictions and can continue to stake crypto as before.
Coinbase emphasized that any cryptocurrencies staked by users in the four affected states prior to the issuance of the orders on June 6 remain unaffected by the pause in services.
The exchange also raised concerns about the potential implications of the restrictions, warning that they could result in American users missing out on the economic benefits of the crypto economy, with these advantages possibly going to residents of other states or even overseas.
As of July 13, court documents from the pre-motion hearing of the SEC vs. Coinbase case revealed that the SEC had yet to approve Coinbase’s business structure when granting permission for the exchange to go public in April 2021.
This was in response to Coinbase’s argument that the regulatory body is charging the firm despite its business structure and planned activities being “exhaustively described” to the agency before the Coinbase public offering.
