South Carolina Drops Lawsuit Against Coinbase Regarding Staking Activities

South Carolina has abandoned its legal action against Coinbase, the cryptocurrency exchange, which was accused of providing unregistered securities.

The South Carolina Attorney General's securities division dismissed the case as part of a mutual agreement with Coinbase, marking another success for the exchange. This comes after Vermont dropped a similar case earlier this month, according to Paul Grewal, Coinbase's chief legal officer.

"The dominoes continue to fall [...] This is not just a win for us, but for American consumers, and we hope it's a sign of things to come in the few states remaining that restrict staking," Grewal wrote in a Mar. 27 blog post.

South Carolina was one of ten states that took legal action against Coinbase in June 2023 due to its staking rewards program. This coordinated enforcement effort involved states such as California, New Jersey, and Illinois, following a multistate investigation supported by the U.S. Securities and Exchange Commission.

The states alleged that Coinbase's staking service constituted selling unregistered securities since users deposited crypto assets to validate blockchain transactions and received rewards in return, with Coinbase taking a percentage. Each state issued cease-and-desist orders and argued that the program needed to be registered or meet exemption rules under their securities laws.

On the same day, the SEC filed a complaint claiming that Coinbase had been operating its platform in the U.S. without registering as a broker, national securities exchange, or clearing agency since 2019.

However, the SEC dropped its case in February 2025, causing a shift in momentum.

Grewal estimated that South Carolina residents lost around $2 million in staking rewards due to the restrictions and urged the remaining states to reconsider their positions.

The other eight states involved in similar enforcement actions are Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin.

Grewal also confirmed that staking was once again available in South Carolina across all access points, including the Coinbase app and website.

Meanwhile, Coinbase has continued its expansion efforts, recently suggesting a possible acquisition of crypto exchange Deribit. The exchange is also preparing to re-enter the Indian market after receiving approval from the country's Financial Intelligence Unit.