Coinbase, one of the worlds largest crypto exchange, has suspended its staking services for US state of Maryland residents. The exchange was served a cease and desist order issued by the Maryland Securities Commissioner on June 6, 2023.
The order targets specific aspects of Coinbase’s staking services. It also signals the start of a legal battle between the company and state regulators. Coinbase was also engaged in a legal battle with the U.S. Securities Exchange Commission (SEC).
Staking halt on Coinbase
Since the issuance of the order, Coinbase has been engaged in ongoing discussions with the Maryland Securities Division. According to an email sent to its customers, Coinbase should making modifications to its staking services for Maryland users. It will have an immediate impact.
Maryland residents will no longer be able to stake additional cryptocurrencies on the platform starting from Thursday. Coinbase will further unstake any crypto assets and accrued rewards that were staked after June 5. However, the company has given a guarantee that all unstaked funds will be retained in their primary balances.
The upcoming legal drama
As expected, Coinbase has expressed its disagreement with the interpretation of its retail staking services by the authorities. The company says that Commisioner’s order is a preliminary step in the ongoing legal case and not the final legal judgment. Coinbase seems to be committed to defending its staking services in Maryland.
This order could have many implications for Coinbase and the wider cryptocurrency industry. The outcome could set a precedent to regulate staking services under state securities laws. It can have effects on how other states look at staking services as well. Coinbase should to keep its Maryland customers informed throughout this legal hurdle.
Maryland Coinbase customers will continue to earn rewards on their staked balances. Only catch is that these rewards cannot be re-staked. They will also have the option to unstake their crypto at any time subject to pre-set unstaking periods.
