Illinois has become the fourth state to drop its lawsuit against Coinbase related to its staking program. This decision illustrates a new trend in state approaches to crypto services in the US.
Background: The Genesis of the Lawsuits Against Coinbase
In June 2023, a group of ten US states sued Coinbase, claiming that the staking rewards program was an offering of unregistered securities. The central issue was that staking, where cryptocurrency holders lock up their assets to support blockchain network operations, was seen as an investment contract that needed registration under securities laws. The SEC also filed a federal lawsuit against Coinbase, mirroring the states' concerns.
Illinois Withdraws Lawsuit Against Coinbase's Staking Program
Illinois's recent announcement continues the trend of states reassessing their positions. A spokesperson for the Illinois Secretary of State’s office said, *“The office will drop the Coinbase lawsuit”*, but no timeline was provided. This withdrawal coincides with Illinois's efforts towards developing a Bitcoin strategic reserve bill, which would establish a fund to hold Bitcoin as an asset for at least five years.
Remaining States and the Crypto Industry
Despite these withdrawals, six states (Alabama, California, Maryland, New Jersey, Washington, and Wisconsin) continue to pursue lawsuits against Coinbase. The crypto industry remains cautiously optimistic. Coinbase's Chief Legal Officer Paul Grewal emphasized the need for a federal regulatory framework, stating, *“As we have always said: staking services are not securities. We applaud Vermont for moving forward and giving clarity to its citizens who own digital assets.”*
The state-level withdrawals coincide with a significant shift in the SEC’s approach to crypto under new leadership. The broader trend towards re-evaluation of lawsuits may signal a path toward a unified framework and stability in the US cryptocurrency market.
