Kentucky Bails on Coinbase Staking Lawsuit, Joins Crypto Clarity Chorus

Bluegrass State Ditches Case, Calls for Federal Action

Kentucky just threw in the towel on its legal battle with Coinbase over staking services, making it the third U.S. state to back off in recent months. The drama's cooling down, but the fight for clarity's heating up!

On March 31, the Kentucky Department of Financial Institutions slammed the door on its case with a joint stipulation of dismissal. They'd been accusing Coinbase of slinging unregistered securities through its staking program, but no more.

Right after the news broke, Coinbase's Chief Legal Officer Paul Grewal hit up X, demanding federal clarity. "Congress needs to end this litigation-driven, state-by-state approach with a federal market structure law ASAP," he fired off.

Kentucky's move echoes similar retreats by Vermont and South Carolina. Vermont bailed on March 14, pointing to the SEC's federal case dismissal and the desperate need for nationwide rules. It's like a domino effect, but for crypto regulation!

The SEC kicked off this trend earlier this year, dropping its own Coinbase lawsuit on Feb. 27. They said it would help them rethink and reshape their whole approach to crypto regulation. Talk about a plot twist!

South Carolina followed Vermont's lead and dropped its case just days later. Grewal pointed out that local users lost around $2 million in staking rewards because of the ban. But within hours of the suit being dropped, Coinbase confirmed that staking was back in action across all access points in South Carolina. That's what I call a comeback!

Remember, a group of ten states originally ganged up on Coinbase back in June 2023, right after the SEC sued them. Regulators claimed Coinbase's staking program was basically an unregistered securities offering, with users earning rewards by delegating their tokens through the platform.

As of now, seven states are still in the ring with Coinbase: California, New Jersey, Illinois, Washington, Alabama, Maryland, and Wisconsin. They've got pending actions, but who knows how long they'll last?

Kentucky dropped the Coinbase lawsuit less than a week after Governor Andy Beshear signed the state's "Bitcoin Rights" bill into law. It's a game-changer, securing the right to self-custody, letting residents run blockchain nodes, and shielding mining operations from discriminatory regulations. Kentucky's going all-in on crypto!

And that's not all - lawmakers are also mulling over a separate proposal that would let the state put up to 10% of its excess reserves into Bitcoin. Talk about putting your money where your mouth is!