Another Win for Coinbase as State-Level Legal Pressure Eases
Illinois has joined a growing list of U.S. states that are backing away from legal actions targeting Coinbase’s staking rewards program. A spokesperson for the Illinois Secretary of State confirmed on April 3 that the case would be dropped, though a formal dismissal filing had not yet been submitted at the time of the statement.
SCOOP: The Illinois Secretary of State intends to drop its staking lawsuit against @coinbase, joining Kentucky, South Carolina and Vermont in backing down from litigation against the crypto exchange.@cheyenneligon reportshttps://t.co/f71kAbYrMm
— CoinDesk (@CoinDesk) April 3, 2025
This move follows similar decisions by Kentucky, Vermont, and South Carolina, all of which have withdrawn lawsuits against Coinbase in recent weeks.
Background: A Coordinated Legal Effort
In June 2023, financial regulators from 10 U.S. states filed lawsuits against Coinbase, alleging that the company had violated securities laws by offering staking services without proper registration. The coordinated legal action coincided with a broader enforcement effort led by the U.S. Securities and Exchange Commission (SEC), which also sued Coinbase the same day.
The participating states included:
-
Alabama
-
California
-
Illinois
-
Kentucky
-
Maryland
-
New Jersey
-
South Carolina
-
Vermont
-
Washington
-
Wisconsin
Now, with Illinois signaling its intent to exit, only a handful of those original cases remain active.
Legal Landscape Continues to Shift
A representative from the New Jersey Bureau of Securities confirmed that the state’s lawsuit against Coinbase is still ongoing. Meanwhile, observers note that the SEC’s recent decision to drop its own staking-related claims against the exchange in February has likely influenced state regulators to reassess their positions.
Coinbase Chief Legal Officer Paul Grewal has repeatedly called for a federal regulatory framework to replace the current patchwork of state-by-state enforcement, arguing that such clarity is essential for fostering innovation and investor protection in the crypto space.
“It’s time for Congress to act and create uniform rules of the road for digital assets,” Grewal said in a previous statement.
@GovAndyBeshear’s Department of Financial Institutions has followed suit by dismissing Kentucky’s staking lawsuit against @coinbase— just as Vermont and South Carolina recently did. Congress needs to end this litigation-driven, state-by-state approach with a federal market… https://t.co/LyCy2iLS20
— paulgrewal.eth (@iampaulgrewal) March 31, 2025
Implications for the Industry
The wave of state-level withdrawals is seen as a positive signal for Coinbase and the broader crypto staking ecosystem, which has faced growing scrutiny over the last two years. While the legal uncertainty has not completely cleared, the recent developments suggest a more conciliatory regulatory approach may be emerging.
With fewer active cases and increased bipartisan interest in federal stablecoin and crypto legislation, industry participants are cautiously optimistic that clearer regulatory guidelines could soon replace enforcement-led policy.
As of now, Coinbase continues to operate its staking program, and the firm has maintained that the service does not constitute a securities offering under current U.S. law.
