Kentucky’s Department of Financial Institutions has dismissed its lawsuit against Coinbase over the exchange’s staking rewards program, joining Vermont and South Carolina in dropping legal action against the popular cryptocurrency platform. The decision to dismiss the lawsuit was jointly filed by Kentucky and Coinbase on April 1, ending the state’s legal battle that was initially filed with 10 other state regulators in June 2023.
Coinbase’s chief legal officer, Paul Grewal, called for a federal market structure law to end the state-by-state litigation approach. While Kentucky, Vermont, and South Carolina have dropped their lawsuits, seven other states including Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin are still pursuing legal action against Coinbase for allegedly breaching securities laws with its staking rewards program.
The drop in state-level lawsuits against Coinbase coincides with a shift in policy at the Securities and Exchange Commission (SEC), which has dropped or delayed multiple lawsuits against crypto companies under the Biden administration. The SEC has also established a Crypto Task Force to engage with the industry on how to approach cryptocurrencies. Kentucky’s decision follows the state’s recent enactment of a “Bitcoin Rights” bill that provides protections for cryptocurrency self-custody and exempts crypto mining from certain regulations.
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