The post Kentucky Dismisses Lawsuit Against Coinbase’s Crypto Staking Service appeared on BitcoinEthereumNews.com.

Key Takeaways: The Kentucky Public Service Commission (PSC) has officially dropped its lawsuit against Coinbase regarding its staking service. The lawsuit had been filed to determine whether Coinbase’s staking program was violating state securities laws. The decision comes as several other states continue with similar lawsuits against the platform. Though this is a minor win for Coinbase, the exchange continues to have major legal fights with the U.S. Securities and Exchange Commission (SEC). Background of the Lawsuit In early 2023, the Kentucky Public Service Commission (PSC) sued Coinbase, claiming that its staking product could be an unregistered investment contract under state securities laws. Regulators in a number of states, along with the SEC, have argued that staking services constitute investment contracts and, as a result, need to be registered as securities. If Coinbase failed to register the services, it would be breaking securities laws. Why Did Kentucky Drop the Lawsuit? On March 31, 2025, the Kentucky PSC unexpectedly announced that it was dropping the lawsuit against Coinbase without commenting on the reasons. The decision could reflect a shift in the state’s regulatory stance on staking or indicate that the authorities lacked sufficient cause to proceed with the case. There might be different possible reasons for such a decision: Lack of tangible evidence to qualify staking as a security – Staking, as opposed to traditional financial products, does not guarantee fixed returns but is dependent on blockchain protocols. Variety of state opinions – Even while some states like New York and California persist with prosecuting staking, Kentucky’s reversal shows that there is no consensus between states to consider staking a security. Pressure from the crypto industry – Coinbase has consistently defended its staking service, arguing that it does not amount to a securities offering but a platform that allows users to…

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Filed under: News - @ April 1, 2025 10:26 pm