Coinbase continues to escalate its Legal Jujitsu against state-level bans on its staking program. They are calling for a public campaign and publicly lobbying regulators to reconsider their stances. The cryptocurrency exchange estimates that residents in the four states with active bans—California, Maryland, Wisconsin, and New Jersey—have already missed out on $90 million in potential staking rewards. These states, aside from Washington State, are currently using their cease-and-desist orders to attack Coinbase.

The company’s counterpoint is that these bans are not just needlessly costing residents’ money, but imposing unnecessary regulatory uncertainty. Coinbase claims that its staking program is a valid financial product. They contend that it is not a high-risk plan requiring such precautionary measures.

Legal Battles and Regulatory Pushback

Coinbase is being sued in five other states over its staking program. As the states zealously march ahead with rulemaking, our own Vice President of Legal Paul VanGrack has publicly slammed those moves. He’s asking them to withdraw their lawsuits.

"All but one (Washington) are enforcing cease-and-desist orders that have already cost residents tens of millions of dollars in missed staking rewards, while limiting consumer choice and increasing regulatory uncertainty." - Paul VanGrack

VanGrack makes the point that the bans specifically target Coinbase, a publicly traded company with a long history of safety and compliance. Theodorou counters that robust actions are typically only taken in times of emergency. Ponzi schemes certainly fit that bill, but Coinbase’s staking program does not.

"It's time for these states to catch up with the SEC—and nearly every other state—and drop their unfounded cases." - Paul VanGrack

A Growing Confidence

Coinbase has certainly been getting bolder in its pursuit of regulatory clarity. This new offensive comes in the wake of recent legal developments that have emboldened their aggressiveness. The SEC just recently dropped that lawsuit against Coinbase with prejudice. This dismissal emboldens the firm’s stance as they continue through the difficult regulatory obstacle course that has recently been built up around digital assets.

Coinbase has repeatedly argued during the legal proceedings that its staking-as-a-service program is legal and helps users. The company boasted about its efforts to work with regulators towards clear and consistent regulation for the nascent cryptocurrency industry.

Still, the exchange has long touting its commitment to compliance and user protection. This diligence-centered approach makes it a thoughtful, trustworthy participant in the fast-evolving digital asset landscape.

The Stakes of Staking

Coinbase’s staking program is a service where users earn rewards by helping to validate blockchain transactions. The exchange argues that it is mission critical to the larger cryptocurrency ecosystem. It provides users with an avenue to generate passive income.

The company claims that the bans are harming local residents economically. Beyond the costs though, they stifle innovation and restrict consumer choice. Coinbase knows that creating a regulatory environment that promotes responsible innovation and protects consumers is crucial.

Coinbase's concerns extend beyond its own business interests, as the company frames the issue as a matter of fairness and consumer access to financial opportunities. The company is optimistic that it will be able to convince regulators to change their minds and permit residents to join its staking program.