In a recent development, the popular US cryptocurrency exchange Coinbase has announced the suspension of its staking services in Maryland. The decision comes as a response to a cease and desist order issued by the Maryland Securities Commissioner on June 6, 2023. While this order specifically targets certain aspects of Coinbase’s staking services, it also marks the beginning of a legal battle for the company.
“Coinbase has been in dialogue with the Maryland Securities Division since the issuance of the order,” stated the email sent to customers. To comply with the legal directive, Coinbase is modifying its staking services for Maryland residents.”
Staking is an essential process in the world of cryptocurrency, allowing holders to earn rewards by participating in network security and operations. However, due to the recent developments in Maryland, users based in the state will experience immediate changes. Starting on Thursday, Maryland users will no longer be able to stake additional cryptocurrencies. Coinbase also plans to unstake any cryptos that were staked after June 5, including any accrued rewards. It’s crucial to note that all unstaked funds will remain in users’ primary balances, as assured by Coinbase.
“Coinbase disagrees with the Maryland Securities Division’s interpretation of its retail staking services under state securities laws,” the company expressed. “This order is not a conclusive legal judgment but a preliminary step in the ongoing case.”
Despite the disagreement, Coinbase is fully committed to compliance and intends to adhere to the terms of the order while defending its staking services in Maryland. This legal challenge holds significant importance for Coinbase, as the outcome could have broader implications for the regulation of staking services under state securities laws. As the case progresses, Coinbase aims to keep its Maryland customers informed and engaged throughout the process.
Throughout the legal proceedings, customers based in Maryland can expect certain changes. While they will still earn rewards on balances that remain staked, these rewards will not be re-staked. Additionally, customers have the option to unstake their assets at any time via the Earn tab on Coinbase, subject to standard unstaking periods.
The situation in Maryland brings attention to the overall cryptocurrency regulation in the United States. This case has the potential to set a precedent for how other states view and regulate staking services. With Maryland taking a definitive stance, it could prompt other states to re-evaluate their regulatory approach to cryptocurrency operations.
