In a sign of changing regulatory winds, the Alabama Securities Commission has officially withdrawn its lawsuit against Coinbase over the exchange’s staking services. Filed on April 23, the motion reflects a growing move away from state-level enforcement as the U.S. heads toward cohesive federal oversight of digital assets.
Alabama originally filed its complaint in June 2023, alleging Coinbase had violated securities laws by offering staking products without proper registration. The state now says it’s stepping aside to give the U.S. Securities and Exchange Commission (SEC) room to finalize a comprehensive national framework. The court filing points to the SEC’s recently launched Crypto Task Force as a key reason for the withdrawal, urging that rulemaking—not litigation—should take precedence in defining policy for emerging financial technologies.
More States Are Backing Off Enforcement
Alabama joins Vermont, South Carolina, and Kentucky in dropping similar lawsuits filed against Coinbase throughout 2023. The coordinated withdrawals suggest that fragmented, state-by-state crackdowns may no longer be viable as the federal government asserts greater regulatory leadership.
The shift also reflects the evolving posture of the SEC under new leadership, where there has been a noticeable softening of aggressive enforcement in favor of industry collaboration and clarity.
However, not all states are backing down. California, Illinois, Maryland, New Jersey, and Washington continue to pursue lawsuits against Coinbase tied to its staking services. Critics, including Coinbase, argue that this legal fragmentation is counterproductive.
“Alabama just dropped its enforcement action against Coinbase – cutting the number of states with misguided staking suits in half in just two months,” said Coinbase Chief Legal Officer Paul Grewal in a post on X.
“It’s time for these outliers to follow suit and for Congress to get a framework passed, so everyone can move forward.”
A Push Toward Federal Regulatory Coherence
Alabama’s move is a welcome signal for the crypto industry, which has long called for national consistency over local ambiguity. The SEC’s evolving stance under Chair Paul Atkins and the formation of a dedicated Crypto Task Force, led by Commissioner Hester Peirce, underscores a new era of rulemaking.
This task force is tasked with:
- Clarifying which digital assets qualify as securities
- Creating tailored disclosure rules for crypto projects
- Encouraging dialogue between regulators and Web3 innovators
The SEC’s new strategy dovetails with other federal efforts, including the Department of Justice’s reduced focus on crypto prosecutions, further reinforcing the shift toward a more innovation-friendly regulatory climate.
As rulemaking begins and more states reconsider their enforcement strategies, industry participants remain hopeful that a transparent and unified policy environment is finally within reach.
Quick Facts
- Alabama has dropped its lawsuit against Coinbase over staking services, citing ongoing federal rulemaking.
- Vermont, South Carolina, and Kentucky have also dismissed similar cases.
- Five states—including California and New Jersey—continue to pursue legal action.
- The SEC’s Crypto Task Force is spearheading efforts to establish unified national guidelines for digital assets.
