The decision is another example of how the US is changing its stance on cryptocurrency
Kentucky has officially dropped its case against Coinbase, making it the third state to do so in recent weeks. The state’s Department of Financial Institutions filed the motion to dismiss yesterday, following similar moves by Vermont and South Carolina. This decision brings an end to Kentucky’s involvement in the legal actions that began in June 2023 when multiple states accused Coinbase of violating securities laws through its staking rewards program.
@GovAndyBeshear’s Department of Financial Institutions has followed suit by dismissing Kentucky's staking lawsuit against @coinbase— just as Vermont and South Carolina recently did. Congress needs to end this litigation-driven, state-by-state approach with a federal market… https://t.co/LyCy2iLS20
— paulgrewal.eth (@iampaulgrewal) March 31, 2025
Coinbase’s CLO, Paul Grewal, responded to the news by calling for a unified federal approach to cryptocurrency regulation. He emphasized that the current method of state-by-state litigation creates unnecessary legal battles and urged Congress to establish clear federal guidelines.
The initial wave of lawsuits included ten states, all taking action on the same day the Securities and Exchange Commission (SEC) filed its own lawsuit against Coinbase. However, the SEC abandoned its case in February, a move that signaled a shift in regulatory strategy. Vermont was the first state to drop its case on March 13, citing the SEC’s decision and potential changes in federal regulatory guidance. South Carolina followed suit on March 27.
Despite these developments, seven states—Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin—are still pursuing legal action against Coinbase. They argue that the exchange’s staking program operates as an unregistered securities offering.
Kentucky’s decision comes just days after Governor Andy Beshear signed a “Bitcoin Rights” bill into law. The legislation provides legal protections for self-custody of digital assets and exempts cryptocurrency mining from securities and money-transmitting laws.
These dropped lawsuits reflect broader shifts in US crypto regulation, with the SEC re-evaluating its stance on enforcement. The agency recently formed a Crypto Task Force to engage with industry leaders and explore a more structured regulatory framework.
