Last updated on April 30th, 2025 at 08:18 pm
Kentucky has officially ended its legal battle with Coinbase over the exchange’s staking services, making it the third U.S. state in recent months to roll back enforcement efforts.
On March 31, the Kentucky Department of Financial Institutions filed a joint stipulation of dismissal, closing the case that accused Coinbase of offering unregistered securities through its staking program. The decision follows similar moves by Vermont and South Carolina, signalling a shift in state-level enforcement against the crypto exchange.
Coinbase’s Chief Legal Officer, Paul Grewal, responded to the latest development on X, urging lawmakers to establish a unified regulatory framework. “Congress needs to end this litigation-driven, state-by-state approach with a federal market structure law ASAP,” he wrote.
Vermont was the first to drop its case on March 14, pointing to the dismissal of the U.S. Securities and Exchange Commission’s (SEC) federal lawsuit and the broader need for regulatory clarity. The SEC voluntarily withdrew its case against Coinbase on February 27, citing efforts to reassess its approach to crypto regulation. South Carolina followed Vermont’s lead shortly after, with Grewal revealing that local users had lost around $2 million in staking rewards due to the enforcement action. Once the case was dismissed, Coinbase swiftly reinstated staking services for South Carolina users.
The wave of state lawsuits against Coinbase began in June 2023, when ten states aligned with the SEC’s accusations that the company’s staking program amounted to an unregistered securities offering. While Kentucky, Vermont, and South Carolina have now backed down, seven states—including California, New Jersey, Illinois, Washington, Alabama, Maryland, and Wisconsin—are still pursuing legal action against the exchange.
Kentucky’s decision comes just days after Governor Andy Beshear signed the state’s “Bitcoin Rights” bill. The legislation protects residents’ rights to self-custody digital assets, run blockchain nodes, and shields mining operations from regulatory discrimination. Additionally, lawmakers are considering a proposal allowing the state to invest up to 10% of its excess reserves into Bitcoin.
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