New Jersey Lifts Coinbase Staking Ban, Allowing Service to Resume After 3 Years
Summary
- New Jersey said it had withdrawn Coinbase’s staking service ban and a $5 million fine, allowing the company to resume offering new services after about three years.
- The state, however, said it canceled the order without making a final determination on whether securities laws were violated, and could open new enforcement proceedings on the same issue if necessary.
- Coinbase argued that state-level regulations limited staking reward opportunities in places including New Jersey, and said the decision comes as cryptocurrency regulatory policy has become a major issue ahead of the U.S. midterm elections.
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New Jersey has withdrawn an order that barred cryptocurrency exchange Coinbase from offering staking services.
The New Jersey Bureau of Securities on Oct. 30 canceled its cease-and-desist order against Coinbase’s staking program, Cointelegraph reported on Nov. 2. The move allows Coinbase to offer new staking services to users in the state for the first time in about three years.
The decision also rescinded a $5 million fine imposed in 2023. New Jersey authorities withdrew the order without making a final determination on whether the staking service violated securities laws. The state still retains the option to pursue a new enforcement action on the same matter if needed.
Coinbase said in its third-quarter filing that it was notified on Oct. 29 by New Jersey regulators of plans to withdraw the order. Chief Executive Officer Brian Armstrong said customers in New Jersey will soon be able to use the staking service again.
New Jersey was among 10 U.S. state regulators that moved jointly against Coinbase in 2023, alleging that its staking service violated securities laws. Staking allows users to commit their digital assets to help operate blockchain networks in exchange for rewards. Coinbase has provided the service on behalf of customers and collected fees.
Regulatory issues for Coinbase in the U.S. have not been fully resolved. Legal proceedings against the company are still underway in California, Maryland, Wisconsin and Washington. Washington permits staking services but is seeking to impose a $4 million fine on Coinbase.
Coinbase argues that state-by-state regulation has prevented users from receiving substantial staking rewards. By the company’s estimates, customers in California have missed out on more than $89 million in rewards since 2023, while more than $15 million in reward opportunities were restricted in New Jersey.
The decision comes as cryptocurrency regulation has emerged as a key issue ahead of the U.S. midterm elections. The industry is calling for a unified federal regulatory framework, but related legislation has yet to be completed.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.