South Carolina Dismisses Coinbase Staking Lawsuit, Joins Vermont

South Carolina has become the latest state to dismiss its lawsuit against Coinbase, a prominent cryptocurrency exchange, over its staking services. The lawsuit, which accused Coinbase of offering unregistered securities, was officially dismissed on March 27 through a joint stipulation between the crypto exchange and the South Carolina Attorney General’s securities division. This move follows a similar decision by Vermont, marking a significant shift in the regulatory stance towards cryptocurrency staking in the United States.

Paul Grewal, Coinbase’s chief legal officer, celebrated the dismissal, stating that it is not just a victory for the company but also for American consumers. He expressed hope that other states with restrictions on staking would take notice and follow suit. Grewal highlighted that South Carolina residents lost an estimated $2 million in staking rewards due to the lawsuit, emphasizing the importance of clear regulations and consumer protections in the cryptocurrency space.

The lawsuit against Coinbase was part of a broader legal action taken by 10 US states on June 6, 2023, the same day the federal securities regulator filed its lawsuit against the crypto exchange. The Securities and Exchange Commission (SEC) officially dismissed that lawsuit on Feb. 27, 2025. The other states that filed similar enforcement actions included Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin.

In a related development, a state lawmaker introduced the “Strategic Digital Assets Reserve Act of South Carolina” on March 27. This bill, if passed, would allow the state treasurer to allocate up to 10% of certain state funds to cryptocurrencies such as Bitcoin. The bill specifically mentions Bitcoin and allows the treasurer to establish a reserve that exceeds no more than 1 million Bitcoin. This move aligns with the federal government's recent establishment of a Strategic Bitcoin Reserve, which also aims to use cryptocurrency forfeited in government criminal cases.

The dismissal of the lawsuit by South Carolina and Vermont signals a growing acceptance of cryptocurrency staking services within the regulatory framework. This development is likely to encourage other states to reconsider their staking regulations, potentially leading to a more favorable environment for cryptocurrency exchanges and their users. As Coinbase continues to navigate the regulatory landscape, its recent victories suggest a positive outlook for the future of cryptocurrency staking in the United States.