Kentucky Withdraws Coinbase Custody Lawsuit, Joins Vermont, South Carolina

BlockBeats News, April 2nd, according to Cointelegraph’s report, yesterday, the Kentucky Department of Financial Institutions (DFI) became the third state-level regulatory agency to withdraw its lawsuit against Coinbase's staking rewards program, following Vermont (March 13) and South Carolina (March 27). The class-action lawsuit, which began in June 2023, was initially filed by 11 states simultaneously with the SEC, alleging that the exchange’s staking service violated securities laws.

Kentucky's decision to withdraw the lawsuit coincides with Governor Andy Beshear signing the "Bitcoin Bill of Rights" on March 24th, which explicitly establishes protections for cryptocurrency self-custody, exempts mining activities from money transmission and securities law constraints, among other provisions. This legislation is seen as a groundbreaking challenge to the federal regulatory framework. Despite the clear trend of regulatory loosening, seven states—Alabama, California, Illinois, Maryland, New Jersey, Washington, and Wisconsin—still adhere to their lawsuits against Coinbase. Coinbase's legal team is pushing for Congress to enact federal market structure legislation to end the "patchwork of state-by-state lawsuits."