Coinbase, the largest U.S. crypto exchange by trading volume, has temporarily suspended its retail staking service in four U.S. states due to legal orders from local regulators. The states where users cannot stake cryptocurrencies through Coinbase are California, New Jersey, South Carolina, and Wisconsin. Residents in these states will not be able to use Coinbase's staking service until further notice, or at least until the legal proceedings finalize. - Cryptocurrencies staked before the local orders will not be affected by the move.
- The move came more than a month after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, labeling some tokens listed on the exchange and its staking service as unregistered securities.
- At the time, the local regulators from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin also simultaneously issued an order against Coinbase, alleging the exchange of violating the securities laws through its staking service.
- Coinbase said it would fully comply with the preliminary state orders where required, though it strongly disagrees with any allegation that its staking services are securities.
- The firm also added that the other six states do not require a pause for the service.
In February, the SEC also forced crypto exchange Kraken to halt the operations of its crypto staking service for U.S. customers and to pay a $30M fine to settle, citing that the platform offered unregistered securities. - At the time, Coinbase said its staking programs were fundamentally different from Kraken's.
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