Kentucky withdraws against Coinbase: A step towards legal clarity for the crypto industry

<p> <strong> Kentucky withdraws against Coinbase: A step towards legal clarity for the crypto industry </strong> </p>

kentucky causes a lawsuit against coinbase

The state of Kentucky dropped his complaint against the Coinbase crypto exchange on March 31, 2023. This decision marks the end of an almost two -year legal dispute between the Kentucky Department of Financial Institutions and the exchange of cryptocurrency. In a joint report, both parties announced that they had agreed to withdraw the lawsuit without prejudices. With this step, Kentucky is involved in the growing number of states that have taken legal action against Coinbase after the exchange in 2023 was sued for the operation of its invitation services. Vermont and South Carolina also dropped similar complaints.

Coinbase is one of the largest providers of staking-as-a-service in the USA and has 3.84 million ETH and 120,000 validators under his control. In addition, Coinbase is the largest operator of nodes with a share of 11.42 % of the clocked ETH.

In recent years, both state and state supervisory authorities have increasingly acted against cryptocurrency exchanges. Some stock exchanges, such as octopuses, have already paid fines because they offered staking services. During this time, the regulatory environment for the crypto industry has changed both at state and federal level. This meant that Vermont dropped his own measures on March 14 after the US Securities and Exchange Commission (Sec) rejected her complaint against Coinbase.

Despite the latest developments, seven states, including California, Washington, Maryland, Alabama, Wisconsin, New Jersey and Illinois, still have enforcement measures against coin base. However, it is likely that these states will also reject their complaints at some point.

In a comment on X (formerly Twitter), Paul Grewal, the legal advisor of Coinbase, expressed his concern about the state-regulated approach regarding crypto staking and asked the congress to promptly adopt a Federal Market structure law. He emphasized:

"The congress must end this disputed approach at the state level with a Federal Market Structure Act as soon as possible."

Grewal described the various returns of the lawsuit as victory for the crypto industry and consumers. He found that the lawsuit had caused Coinbase to suspend his staking service in South Carolina and the state received $ 2 million.

Law on Bitcoin rights as a trigger for the refusal of action in Kentucky

The decision to dismiss in Kentucky was less than a week after governor Andy Beshear signed a law on Bitcoin rights. This law grants the state the right to protect and operate digital assets and gives the crypto industry legal clarity. According to the new law, mining and staking are no longer regarded as securities, and node operators are no longer classified as a transmitter.

The law was introduced on February 19, 2023, which means that it took less than two months before it was passed by both chambers of the state legislator and the governor. In addition to the protection of staking and mining, the law also prohibits any changes in zoning that discriminate against crypto mining operation.

In addition, Kentucky has brought in a law on the creation of a Bitcoin reserve that enables the state to invest up to 10 % of its portfolio in digital assets. This proposed legislation is still in the examination process.

The developments in Kentucky show how the regulatory environment for cryptocurrencies in the USA is developing and how local laws can contribute to the withdrawal of lawsuits against crypto services.