Vermont Withdraws Case Against Coinbase Following in SEC's Footsteps

Vermont has withdrawn its “show cause order” against Coinbase, following the US Securities and Exchange Commission’s (SEC) recent decision to drop its case against the crypto exchange.

The state’s Department of Financial Regulation announced yesterday that it would rescind its action "without prejudice."

In February, the SEC dropped its lawsuit against Coinbase in what the exchange described as a change in “political leadership” at the agency.

According to Coinbase’s chief legal officer, Paul Grewal, the SEC has agreed “in principle” to dismiss the lawsuit, which accused the exchange of failing to register as a securities platform.

The regulator sued Coinbase in June 2023 on the basis that Coinbase was operating as an unregistered securities exchange, broker, and clearing agency. It prompted several US states—including Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin—to take legal action against the exchange.

“The SEC has announced the formation of a new task force to, among other things, provide guidance for the promulgation of rules regarding the regulation of cryptocurrency products and services,” Vermont’s financial regulator said.

Coinbase chief legal officer Paul Grewal has now called on other states to follow Vermont's lead. “As we have always said: staking services are not securities. We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets,” he tweeted, further emphasizing the need for Congress to advance bipartisan legislation that acknowledges the unique aspects of digital assets, including staking.