- Paul Grewal, Coinbase’s chief legal officer, said their “work isn’t over”
- Vermont issued a Show Cause Order shortly after the SEC filed a lawsuit against Coinbase in 2023
- The SEC dropped its lawsuit against Coinbase in February
The US state of Vermont has dismissed its legal action against Coinbase over staking services, granting the exchange another notable victory in its ongoing regulatory battles.
Paul Grewal, Coinbase’s chief legal officer, posted on X that “staking services are not securities” and praised Vermont for providing clarity to residents who own digital assets. He added that “our work isn’t over” and suggested that other states pursuing similar actions should follow Vermont’s example.
Today the State of Vermont dismissed its action against @Coinbase regarding staking services. 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. 1/3
— paulgrewal.eth (@iampaulgrewal) March 13, 2025
Vermont’s dismissal follows the US Securities and Exchange Commission’s decision to drop its lawsuit against Coinbase in February. The SEC had sued Coinbase in 2023, alleging the platform operated as an unregistered securities exchange. The federal action’s dismissal appears to have influenced Vermont’s decision to rescind its own enforcement order.
Show Cause Order
Vermont was among ten states that took legal action against Coinbase in 2023. The group included Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin. Those states argued that Coinbase’s staking offerings met the legal definition of securities under their respective laws.
In a signed order from Vermont’s Department of Financial Regulation, the division stated that “in light of the dismissal of the Federal Action and likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice.”
A show cause order requires a party to explain why a proposed enforcement action should not proceed. Vermont’s show cause order had alleged that Coinbase provided staking services without a license and therefore violated securities regulations. By rescinding that order without prejudice, Vermont has paused its action pending potential federal clarification.
The regulatory landscape has shifted since the original wave of enforcement. With a change in the White House and new leadership at the SEC, the agency has signaled a more favorable stance toward digital-asset markets. Former SEC chair Gary Gensler has departed, and Mark Uyeda served as acting chair while Paul Atkins was nominated as the next SEC chair. Those leadership changes, along with the federal dismissal, helped prompt Vermont’s decision.
In recent months the SEC has also withdrawn or declined to pursue several other high-profile actions in the crypto sector, including cases or investigations involving Kraken, Robinhood Crypto, and Uniswap. Those developments have contributed to a broader reassessment of enforcement priorities and regulatory approaches across federal and state authorities.
Coinbase, which continues to defend its staking product as not constituting a security, welcomed Vermont’s decision as a meaningful step toward regulatory clarity. While this dismissal removes one state-level hurdle, Coinbase and other industry participants remain engaged in ongoing legal and policy efforts to define how digital-asset services should be regulated in the United States.