Coinbase Temporarily Suspends Staking Services in Select US States Amid SEC Lawsuit

In response to legal action from the Securities and Exchange Commission (SEC), Coinbase, a US-based cryptocurrency exchange, has temporarily halted its staking services in four states.

On July 14, Coinbase published a blog post announcing that it was temporarily stopping its retail staking service in Wisconsin, South Carolina, New Jersey, and California. 

The US Securities and Exchange Commission (SEC) sued the cryptocurrency exchange in June for selling unregistered securities, prompting the current ruling. 

Along with the SEC complaint, regulatory agencies in 10 US states started legal actions and suspended some services.

Coinbase stated that it "strongly disagrees" with any claims that its staking services constitute securities. We will, however, totally abide by any preliminary state commands, even if they are issued before we have a chance to raise a defense.

The regulatory measures in California, New Jersey, South Carolina, and Wisconsin are the only ones that call for a halt to the staking of further assets, it is crucial to remember this.

While the legal actions pertaining to such services are ongoing, these states have demanded adjustments to the staking services. 

The temporary ban will not have an impact on cryptocurrency stakes made prior to the publication of these directives.

Users who reside in Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington will remain eligible to stake their cryptocurrency as they were prior to the regulatory actions being taken in those states.

Hearing in Coinbase v. SEC Reveals Tone of Litigation, Impact on Industry

The US SEC and Coinbase pre-motion hearing, originally slated for August but occurred on July 13, provided details on the tone of the dispute and potential effects on the larger crypto industry.

Judge Katherine Polka Faila of the US District Court for the Southern District of New York asked the SEC and Coinbase questions throughout the session, which lasted more than two hours.

Staking's legal definition, Coinbase's IPO disclosures, and the major issues doctrine's applicability were some of these. 

Additionally, Coinbase's attorneys cited the key questions doctrine as part of their response to the SEC's lawsuit, which was recently used by the U.S. Supreme Court to strike down President Biden's proposal for student loan forgiveness.

The hearing also took a brief break so that the parties could discuss the outcome of the federal judge's decision regarding the SEC's unrelated complaint against Ripple.

This case is being observed because it includes the securities regulator of the greatest economy in the world and a reputable cryptocurrency startup, as well as because it has the potential to change the way securities legislation, market structure, and the SEC's regulatory authority are governed in the future. 

The conference's main topics were administrative and procedural issues. 

By claiming that the in question coins do not meet the securities requirements under the Howey test, Coinbase urged the SEC to dismiss its complaint before it had ever been filed. 

The SEC responded by accusing Coinbase of flouting established legal precedents and trying to reinterpret what an investment contract is.

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