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Illinois has officially dropped its lawsuit against Coinbase over the exchange’s staking services, becoming the latest in a string of U.S. states to walk back legal action tied to the controversial crypto practice.
The move signals a broader shift in how state regulators may be recalibrating their stance on staking-as-a-service offerings, especially as the legal landscape around digital assets continues to evolve at the federal level.
A Legal Retreat Gains Momentum
Illinois originally joined several other states in filing suit against Coinbase in 2023, alleging that its staking products constituted unregistered securities offerings. However, the Illinois Secretary of State’s office confirmed this week that the case has been dismissed, with no further enforcement action planned at this time.
This follows similar decisions in California, New Jersey, and Wisconsin, where state agencies have either paused, scaled back, or dropped their own cases against Coinbase and other crypto platforms offering staking services.
Coinbase’s Pushback Pays Off
Coinbase has consistently denied wrongdoing, arguing that its staking service is not a security and operates as a transparent, user-directed process where customers retain ownership of their assets. The company has positioned staking as a vital part of the decentralized ecosystem, helping secure proof-of-stake networks like Ethereum while offering passive yield to users.
“This is a positive development not just for Coinbase, but for the broader crypto industry,” a company spokesperson said following the announcement. “It reinforces our belief that staking is not a security and should be regulated under existing frameworks — not shoehorned into outdated ones.”
A Shift in Regulatory Strategy?
The string of state-level withdrawals may reflect a growing recognition that federal clarity is needed before staking cases can proceed confidently. The SEC has not issued a definitive ruling on whether staking constitutes a securities offering, although it has taken enforcement actions against firms like Kraken, which settled in 2023.
In the absence of unified federal guidance, state-level cases have faced pushback for being inconsistent and potentially premature, especially as litigation against the SEC by Coinbase and other entities plays out in federal courts.
What’s Next for Staking in the U.S.?
While Illinois and other states are pulling back, the fight over staking is far from over. The SEC’s stance remains aggressive, and Congress has yet to pass any comprehensive digital asset legislation. However, with mounting legal wins and softening opposition at the state level, staking could be regaining ground as a legitimate feature of crypto platforms.
For now, Coinbase appears to be on the offensive — and Illinois’ quiet retreat adds fuel to the narrative that staking may survive the U.S. regulatory gauntlet after all.
