South Carolina has recently joined the ranks of states dismissing lawsuits against cryptocurrency exchange Coinbase, specifically regarding its staking services. This legal development marks an essential shift in the evolving landscape of crypto regulation in the United States.
The lawsuit, which accused Coinbase of offering unregistered securities through its staking services, was officially dismissed on March 27, 2023, following a joint stipulation between the crypto exchange and the South Carolina Attorney General’s securities division. Paul Grewal, Coinbase’s chief legal officer, declared this decision a significant victory for both the company and its consumers, emphasizing the need for clear regulatory guidelines surrounding cryptocurrency.
“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,” Grewal stated in a recent post.
South Carolina’s dismissal follows similar actions by Vermont, reflecting a growing recognition among state authorities that the legal grounds for regulating crypto staking may be unfounded. Both states were part of a wave of 10 states that initially sought legal action against Coinbase’s staking services in June 2023, coinciding with a similar lawsuit filed by the Securities and Exchange Commission (SEC) against the exchange.
Interestingly, the SEC itself dismissed its lawsuit against Coinbase on February 27, 2025, indicating a potential shift in regulatory perspectives. The other eight states involved in enforcement actions against Coinbase include Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin. This left many wondering how the crypto landscape would evolve amidst such conflicting regulatory pressures.
Grewal expressed hope that more states would follow South Carolina’s lead, citing the estimated $2 million loss in staking rewards incurred by South Carolina residents due to the lawsuit. He advocated for commonsense consumer protections that would allow the 52 million Americans owning crypto to participate in the market more freely.
Introduction of Bitcoin Reserve Bill
In addition to the legal developments regarding staking, South Carolina is making strides in cryptocurrency adoption with the introduction of the “Strategic Digital Assets Reserve Act.” Proposed on the same day as the lawsuit dismissal, this bill would allow the state treasurer to allocate up to 10% of certain state funds toward cryptocurrencies, such as Bitcoin.
This bill sets itself apart from other state crypto initiatives by directly addressing the allocation of Bitcoin in establishing a reserve. It empowers the state treasurer to create a Bitcoin reserve exceeding one million coins, mirroring legislative efforts at the federal level.
While no specific mention was made of stablecoins, non-fungible tokens, or other crypto tokens, the Strategic Digital Assets Reserve could lay the groundwork for broader state-level adoption of various digital assets. According to Bitcoin Law, 42 Bitcoin reserve bills have been introduced across 19 states, indicating an undeniable momentum towards integrating cryptocurrency into public finance.
Additionally, U.S. President Donald Trump recently signed an executive order aimed at creating a Strategic Bitcoin Reserve and Digital Asset Stockpile, which will utilize forfeited cryptocurrency from government cases. This executive action may further signal a shift in federal policy towards a more accepting approach to Bitcoin and other cryptocurrencies.
The outcome of South Carolina’s legal dismissal and subsequent legislative initiatives highlights both the challenges and opportunities present in the U.S. cryptocurrency landscape. As regulatory frameworks continue to evolve, the potential for greater consumer freedom and advocacy for broad-based adoption remains bright.
