Alabama Drops Coinbase Case as Legal Pressure on Staking Services Eases

Highlights:

• Alabama has ended the case, allowing time for national crypto policy talks to move forward.
• Five states still continue legal action against Coinbase over its staking service.
• Coinbase urges states to drop lawsuits and supports one clear rule for digital asset services.

The Alabama Securities Commission has officially withdrawn its complaint against Coinbase. This move lowers the number of states actively pursuing legal action against the crypto exchange’s staking service. The commission signed a consent order confirming that the case has been closed. Coinbase and the commission agreed to cover the cost they incurred on their own.

We're halfway there: Alabama just dropped its enforcement action against @coinbase – cutting the number of states with misguided staking suits in half in just two months. 1/3 pic.twitter.com/MWVnl30BTl

— paulgrewal.eth (@iampaulgrewal) April 23, 2025

According to the order, the decision does not reflect a change in the commission’s legal view. Instead, the agency said the withdrawal allows time for national discussions on crypto matters to continue. The commission referenced a new task force recently launched by the SEC. The task force is expected to provide guidance on how digital asset services, such as staking, should be handled.

Coinbase’s staking service lets users lock their digital assets to help validate blockchain transactions. In return, users receive rewards, and Coinbase earns a commission for providing the service. Alabama, along with nine other states, had argued that this setup qualified as an investment contract. The state claimed that Coinbase needed to follow state-specific legal requirements to continue offering staking.

Several States Have Dropped Their Lawsuits, While Five Remain

All ten states filed the suits against Coinbase in June 2023. The U.S. SEC supported the joint effort of the multistate investigation. Some of these states further ordered Coinbase to cease offering staking services while the matter was being sorted.

Over the past few months, some states have withdrawn their complaints. Vermont was the first to dismiss its case, doing so on March 13. South Carolina was the second to drop the case. Kentucky also ended its case on April 1. With Alabama’s withdrawal, five states still have active legal complaints against Coinbase.

Paul Grewal stated that four states have completely banned staking with the company. He noted that this approach blocks users from accessing staking through Coinbase. Grewal also said that continuing these cases wastes taxpayer money.

He referred to Alabama’s order, which pointed out that allowing room for national discussions to develop could be more useful than continuing separate state actions. Grewal urged the remaining states to end their lawsuits and allow space for future national decisions.

Ongoing Debate Highlights the Need for Clarity

A separate legal action between the SEC and Coinbase ended in a federal court in February. Both sides agreed to drop the case with prejudice, thus permanently closing the matter. The case played out in the Southern District of New York and involved similar claims around staking.

Grewal underscored that Coinbase will follow the law and is still defending its staking services. He also reiterated the need for a clear and consistent way that would let both users and businesses understand how digital asset services are to be run. The result in Alabama may encourage other states to reassess their legal proceedings. Pressure may mount on the five still continuing their cases to back down too.