Coinbase, one of the largest cryptocurrency exchanges in the world, has been given 28 days to explain to the Alabama Securities Commission (ASC) how its staking program does not violate state securities laws. The ASC has issued a « show cause » order alleging that Coinbase and its parent corporation, Coinbase Global, broke the law by offering the staking rewards program « Earn » to state residents. The regulator wants the entities to show why they should not be directed to cease and desist from selling unregistered securities in Alabama. The ASC’s action is part of a task force of ten state securities regulators in the US, committed to protecting consumers and investors in the decentralized finance space.
The ASC’s order does not forbid Coinbase from offering staking as a service as long as it complies with the law. However, the regulator wants to ensure that investors in crypto asset products are offered the same protections under the law and are fully aware of the risks involved in these investments. Coinbase’s legal troubles come a day after the US Securities and Exchange Commission sued Binance, the world’s largest crypto exchange by market cap, for the alleged sale of unregistered securities. Coinbase was also sued by the SEC for the same reason.
The ASC’s action against Coinbase is not the first of its kind. The regulator issued a similar order to now-bankrupt crypto lender Celsius back in 2021, also suspected of violating state securities laws with its « Earn Rewards » program. The ASC’s move is a reminder that regulators are keeping a close eye on the crypto industry and will take action against companies that violate securities laws.
Keywords: Coinbase, Alabama Securities Commission, staking program, securities laws, Binance, SEC, crypto industry, securities regulators, decentralized finance.