Legal proceedings with Maryland authorities may influence the future of cryptocurrency regulation and staking services across the US.
Coinbase, a prominent US cryptocurrency exchange listed on NASDAQ under the ticker COIN, has announced the suspension of its retail staking services in Maryland, effective immediately. This decision comes in response to a cease and desist order issued by the Maryland Securities Commissioner, impacting staking activities that involve users earning rewards through participating in network security.
Maryland users will no longer have the option to stake additional cryptocurrencies, and Coinbase will initiate the process of unstaking any crypto balances, including accrued rewards, that have been staked since June 5.
Coinbase is currently entangled in a legal battle with the Maryland Securities Division regarding the interpretation of state securities laws as they relate to its retail staking services. Despite its disagreement with Maryland’s position, Coinbase is open to adapting its services. Notably, the order is not considered a final adjudication, hinting at the possibility of a service resumption.
Funds and related rewards affected by this suspension will be transferred to users’ primary accounts. Users can still earn rewards on their remaining staked balance without restaking and can voluntarily opt for unstaking through Coinbase’s Earn tab, adhering to standard unstaking periods.
This dispute carries broader significance, potentially shaping the regulatory landscape for cryptocurrency in the US and establishing a precedent for the regulation of staking services in other states. In parallel, the US Securities and Exchange Commission (SEC) has initiated a broader case against Coinbase.
This recent development follows similar legal actions initiated against Coinbase on June 6 by securities agencies in ten states, including Alabama, California, Illinois, Kentucky, New Jersey, South Carolina, Vermont, Washington, and Wisconsin. Unlike prior instances, the measures taken by Maryland also affect existing staked funds, intensifying the impact of the regulatory dispute.