Coinbase announced that retail clients in four states will no longer be able to add new assets to its staking product due to ongoing legal proceedings.
SEC files lawsuit against the firm
Ten states, which include Alabama, California, and New Jersey, have filed actions against the exchange to stop its staking program within their jurisdictions. This comes after the Securities and Exchange Commission filed a lawsuit against the firm in June.
The SEC and several states argue that the product constitutes an unregistered security offering.
Coinbase claims staking is not a security, maintaining that it is a “core part of ensuring the cryptoeconomy functions for hundreds of millions of users around the globe.”
The company has been communicating with policymakers in multiple states to ensure that its staking program remains available to all users.
However, in California, New Jersey, South Carolina, and Wisconsin, the company will no longer be able to accept additional staking assets from customers.
“Customers’ crypto that was staked before these orders were issued remains unaffected,” the company said in the Friday blog post. “Impacted customers have received an email with more information specific to their state, and all customers can visit our Help Center to learn more about these actions and the changes we will be implementing in the coming weeks in these four states.”
Coinbase staking services will operate normally in other states
Coinbase’s staking services will operate normally in the other states in which there are ongoing proceedings.
“Staking is not some exotic or complex financial product,” the company said.
“In fact, it is not a financial product at all,” it continued.
The notes went on and stated the following:
“Whether a user stakes on their own or through a service like ours, they remain the owner of their crypto at all times. Unlike lending, for example, there is no risk that a borrower will fail to repay, because the underlying crypto remains in custody from start to finish.”
