In a notable shift for the crypto industry, Alabama has officially dropped its enforcement action against Coinbase, reducing the number of states challenging the exchange’s staking program to five.
The development, confirmed by Coinbase’s Chief Legal Officer Paul Grewal on April 23, marks a small but significant victory for the platform in its broader legal standoff over crypto-staking services in the United States.
The Alabama Securities Commission had previously alleged that Coinbase’s staking rewards program, where users earn crypto by helping validate blockchain transactions, amounted to offering unregistered securities. State regulators argued that the program functioned as an investment contract and should fall under securities laws, a claim Coinbase has consistently refuted.
The filing highlighted the U.S. Securities and Exchange Commission’s (SEC) recent formation of a task force focused on developing rulemaking guidance for digital assets. It noted that the Commission “believes it would be apt to allow policymakers time to consider regulatory constructs” rather than pursue litigation prematurely.
Alabama becomes the fifth state to exit the multi-state legal effort, following Vermont, South Carolina, Kentucky, and another unnamed jurisdiction. Vermont led the retreat in March following the U.S. SEC dismissal of its case against Coinbase on February 28, with South Carolina and Kentucky quickly following suit. Paul Grewal described this as “another win for the exchange” and stated that “the dominoes keep falling”.
While Coinbase sees the dismissals as a win for crypto innovation, Grewal emphasized that the legal battle isn’t over. In an April 23 post on X, he criticized the remaining five states for continuing to pursue lawsuits and enforcing staking bans, which he argued limit consumer choice and waste public resources.
He also urged remaining states to reconsider their positions and reiterated Coinbase’s call for Congress to establish a uniform federal framework for digital assets. He added that legal clarity is essential for innovation and consumer protection in the crypto space.
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