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South Carolina has dismissed its lawsuit against Coinbase over staking services, joining Vermont in dropping similar cases
The lawsuit was one of 10 state actions filed in June 2023, alleging Coinbase offered unregistered securities through its staking program
South Carolina residents reportedly lost an estimated $2 million in staking rewards due to restrictions
The SEC had also filed a similar case against Coinbase, which was dismissed in February 2025
Meanwhile, South Carolina has introduced the “Strategic Digital Assets Reserve Act” which could allow the state to allocate up to 10% of certain funds to cryptocurrencies

South Carolina has officially dismissed its lawsuit against cryptocurrency exchange Coinbase regarding its staking services. The dismissal came through a joint stipulation between the crypto exchange and the South Carolina Attorney General’s securities division on March 27, 2025.

South Carolina Attorney General and Coinbase’s joint stipulation. Source: South Carolina Attorney General

The lawsuit was one of ten similar state actions filed against Coinbase on June 6, 2023. These legal challenges claimed the exchange was offering unregistered securities through its staking program. Vermont also recently dropped its case against the company.

Paul Grewal, Coinbase’s chief legal officer, celebrated the dismissal in a post on X. “This is not just a victory for us, but for American consumers and we hope it’s a sign of things to come in the few states left that restrict staking,” Grewal stated.

According to Grewal, South Carolina residents lost approximately $2 million in staking rewards as a result of the lawsuit’s restrictions. He confirmed that staking services are now live again in South Carolina across all access points, including the Coinbase app and website.

The original actions against Coinbase came from Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin. These states issued cease-and-desist orders, arguing that Coinbase’s staking program needed to be registered under their securities laws.

Federal Case Also Dismissed

The state lawsuits coincided with a similar action by the Securities and Exchange Commission (SEC). The federal regulator filed its own lawsuit against Coinbase on the same day as the state actions in 2023.

The SEC’s case claimed Coinbase had been operating in the United States without proper registration as a broker, national securities exchange, or clearing agency since 2019. However, the federal case was officially dismissed on February 27, 2025.

With both the SEC case and now two state lawsuits dismissed, momentum appears to be shifting in Coinbase’s favor. Grewal expressed hope that the remaining eight states with active cases would “take notice” of these dismissals.

The states claimed that Coinbase’s staking service constituted selling unregistered securities. This was because users deposited crypto assets to validate blockchain transactions and received rewards in return, with Coinbase taking a percentage as a fee.

New Bitcoin Reserve Bill Introduced

In a separate but related development, a South Carolina state lawmaker has introduced the “Strategic Digital Assets Reserve Act of South Carolina.” Representative Jordan Pace presented the bill on March 27, the same day as the Coinbase lawsuit dismissal.

Proud to file legislation that empowers SC to follow @realDonaldTrump’s lead to create a state level strategic crypto reserve. This gives the Treasurer new tools to protect taxpayer dollars from inflation https://t.co/JqUuBw243D
— Jordan Pace (@Jscottpace) March 27, 2025

The proposed legislation would allow the state treasurer to allocate up to 10% of certain state funds to cryptocurrencies. Unlike many other state crypto reserve bills, this one specifically mentions Bitcoin on several occasions.

If passed, the bill would permit South Carolina’s treasurer, currently Curtis Loftis, to establish a Bitcoin reserve with a ceiling of up to 1 million Bitcoin. This high limit mirrors efforts at the federal level, where the U.S. government recently established its own Strategic Bitcoin Reserve.

The treasurer would have authority to add Bitcoin to South Carolina’s General Fund, the Budget Stabilization Reserve Fund, and other investment funds under their management. While Bitcoin is the primary focus, the bill states the Strategic Digital Assets Reserve wouldn’t be limited to just Bitcoin.

According to Bitcoin Law, 42 similar Bitcoin reserve bills have been introduced at the state level across 19 states. Of these, 36 bills remain active in various stages of the legislative process.

This state-level movement follows recent federal action. Earlier in March, U.S. President Donald Trump signed an executive order creating a Strategic Bitcoin Reserve and a Digital Asset Stockpile at the national level. These federal reserves will initially use cryptocurrency assets that were forfeited in government criminal cases.

Meanwhile, Coinbase continues its business expansion efforts. Recent reports indicate the company is considering a potential acquisition of crypto exchange Deribit. The exchange is also preparing to re-enter the Indian market after receiving approval from that country’s Financial Intelligence Unit.

The dismissal of the South Carolina case represents another legal win for Coinbase. The company has faced regulatory challenges on multiple fronts but appears to be gaining ground in its legal battles.

Grewal emphasized that the dismissals benefit not just Coinbase but also American consumers. “The 52 million Americans who own crypto deserve commonsense consumer protections and clear rules,” he said. “We applaud South Carolina for standing up for justice.”

With two state cases now dismissed following the SEC’s withdrawal of its lawsuit, the regulatory landscape for cryptocurrency staking services may be evolving. However, eight states still maintain active enforcement actions against Coinbase’s staking program.

As the legal situation continues to develop, Coinbase has resumed offering its staking services to South Carolina residents. The company appears positioned to continue challenging the remaining state actions while expanding its business operations.

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