Coinbase, the leading digital asset exchange in the United States, announced that residents from five states have missed out on more than $90 million in potential staking rewards since June 2023. This loss is attributed to ongoing legal actions against Coinbase's staking services in these states.
In an effort to address the situation, Coinbase publicly called on California, New Jersey, Maryland, Wisconsin, and South Carolina on April 25 to lift restrictions on its staking services. The exchange highlighted that removing these limitations would bring the states in line with the Securities and Exchange Commission (SEC), as several other states have already done.
After the SEC dropped its enforcement action against Coinbase's staking operations earlier this year, Illinois, Kentucky, Vermont, and Alabama also withdrew their actions. However, a few states are still upholding restrictions.
Coinbase argues that the remaining states' bans on staking are outdated and misdirected, emphasizing that such restrictions were originally introduced to combat scams, not legitimate financial services like staking. The exchange warns that unless these restrictions are lifted promptly, the financial impact on residents will continue to escalate.
By hindering access to safe wealth generation tools like staking, the holdout states are causing significant financial losses to their residents, according to Coinbase's chief legal officer, Paul Grewal.
Furthermore, Coinbase points out that these state-level actions not only result in lost earnings but also limit consumers' choices. Residents might be compelled to resort to less secure and lightly regulated staking platforms, exposing them to greater risks.
Emphasizing the detrimental effect on consumers, Coinbase stresses that these actions by the remaining states disrupt competition and push users towards potentially riskier platforms. Furthermore, the ongoing bans contribute to the regulatory uncertainty prevailing in the US digital asset market.
Coinbase urges these states to align with national efforts to modernize crypto regulations, asserting that lifting staking restrictions would not only benefit residents but also foster safer innovation and promote a stronger and more competitive crypto economy in the United States.