South Carolina Joins Vermont in Dismissing Lawsuit Against Coinbase, Marking Victory for Consumers

South Carolina Dismisses Lawsuit Against Coinbase’s Staking Services

In a notable move, South Carolina has officially dismissed its lawsuit against Coinbase related to the company’s staking services, marking a victory for the crypto exchange and American consumers. The lawsuit, which accused Coinbase of offering unregistered securities through its staking services, was dismissed in a joint stipulation between Coinbase and the South Carolina Attorney General's securities division on March 27, 2025.

This dismissal follows a similar decision from Vermont, which also dropped its lawsuit against Coinbase earlier, both cases being part of a broader wave of legal challenges against the exchange’s staking operations. In a statement on X,

Coinbase’s Chief Legal Officer, Paul Grewal, described the dismissal as a significant win, not only for the exchange but also for consumers. He expressed hope that other states with similar legal actions would follow South Carolina's lead.

"South Carolina just joined Vermont to dismiss its unfounded staking lawsuit against Coinbase," Grewal tweeted. "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."

Background of the Legal Action

The legal action against Coinbase began in June 2023, when South Carolina, alongside nine other U.S. states, filed lawsuits accusing Coinbase of offering unregistered securities through its staking services. This was on the same day the U.S. Securities and Exchange Commission (SEC) filed a separate lawsuit against Coinbase. The SEC eventually dismissed its lawsuit on February 27, 2025.

Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin were the other states involved in enforcement actions similar to South Carolina’s. While South Carolina has now dismissed its case, there are still ongoing legal proceedings in the remaining states, though Grewal remains hopeful for a broader shift in sentiment.

The Impact on Consumers and the Industry

Grewal noted that the South Carolina lawsuit had a financial impact on local consumers, estimating that around $2 million in staking rewards were lost by state residents due to the legal proceedings. He emphasized the need for commonsense consumer protections and clearer regulations for the 52 million Americans who own cryptocurrency.

"The 52 million Americans who own crypto deserve commonsense consumer protections and clear rules," Grewal stated. "We applaud South Carolina for standing up for justice and hope the remaining states with bans on staking will take notice."

South Carolina Takes New Steps with Bitcoin Legislation

In addition to the staking lawsuit dismissal, South Carolina is also making waves in the cryptocurrency space with the introduction of the Strategic Digital Assets Reserve Act on March 27, 2025. This bill, introduced by state lawmaker Rep. Jordan Pace, would allow the state treasurer to allocate up to 10% of certain state funds to cryptocurrencies such as Bitcoin (BTC).

The bill includes provisions for establishing a Bitcoin reserve within South Carolina’s General Fund and Budget Stabilization Reserve Fund, with a ceiling of 1 million Bitcoin — a highly ambitious target that aligns with the U.S. federal government’s goals for its own Strategic Bitcoin Reserve.

The bill is notable for being one of the first at the state level to focus exclusively on Bitcoin, without mentioning other cryptocurrencies like stablecoins, Ether (ETH), or non-fungible tokens (NFTs). This marks a strategic move to make Bitcoin a cornerstone of South Carolina’s future financial strategy.

As of now, 42 Bitcoin reserve bills have been introduced in 19 states across the U.S., with 36 of them still live. This move by South Carolina could be part of a growing trend among states seeking to position themselves at the forefront of the evolving cryptocurrency landscape.

What’s Next for Coinbase and Other States?

With the legal victories in South Carolina and Vermont, Coinbase is looking ahead to potential favorable outcomes in other states that are still grappling with cryptocurrency regulations. As state-level legal challenges continue, the broader industry will be watching closely to see how the trend of dismissals impacts the stability and growth of the crypto ecosystem in the U.S.

Meanwhile, South Carolina’s introduction of a Bitcoin reserve bill is an early indicator of how states might begin to incorporate digital assets into their financial systems more seriously. As the U.S. government continues to explore digital asset policies, state governments like South Carolina are clearly taking a proactive stance.

Final Thoughts

The dismissal of the staking lawsuit in South Carolina, along with the introduction of new Bitcoin-focused legislation, underscores a shift toward greater acceptance and integration of cryptocurrencies in the U.S. financial ecosystem. For Coinbase and other crypto exchanges, these developments are welcomed as a step toward clearer regulations and a more favorable operating environment.

With states like South Carolina leading the charge, the future of staking services and crypto reserves looks poised for growth.

For further updates, you can follow Paul Grewal on X or visit Coinbase's official website.