Key facts
- The withdrawal was without prejudice and without a ruling on the merits, leaving the bureau free to file a fresh action.
- Coinbase CEO Brian Armstrong said New Jersey users would regain staking access very soon.
- California, Maryland, Wisconsin and Washington still pursue enforcement actions against Coinbase's staking services.
- Washington's regulator allows staking but seeks a $4 million fine on the exchange.
- Coinbase estimates California users missed over $89 million in staking rewards since 2023, against more than $15 million in New Jersey.
New Jersey's securities regulator rescinded its 2023 cease-and-desist order against Coinbase's staking service, lifting a ban that had stopped residents staking new funds on the exchange for over three years. The October 30 notice, signed by Acting Bureau Chief Keith A. Alt, withdrew the order and its $5 million penalty without prejudice and without a ruling on the merits, leaving the Bureau of Securities free to bring a fresh enforcement action against Coinbase in the future.
Coinbase disclosed the move in its third-quarter filing, stating the regulator informed the company on October 29 of its plan to rescind. CEO Brian Armstrong said New Jersey users would regain staking access very soon. Staking involves committing cryptocurrency to help validate transactions and secure a blockchain in exchange for rewards; companies like Coinbase handle the process for customers and take a share of the rewards as a fee.
California, Maryland, Wisconsin and Washington are still pursuing enforcement actions against the exchange over its staking services. California led the ten-state task force behind the 2023 actions, which covered more than 600,000 accounts held by Californians. Like New Jersey, California, Wisconsin and Maryland banned Coinbase from new staking while their cases ran. Washington's regulator allows staking but the case there seeks to impose a $4 million fine on the exchange.
Coinbase estimates that California users have missed out on over $89 million in staking rewards since 2023, against more than $15 million in New Jersey. The decision came ahead of the November 3 US midterm elections, with prediction markets favoring Democrats to win Senate control, according to the report. A Democratic majority would put Sen. Elizabeth Warren, a prominent crypto critic, in line to chair the Senate Banking Committee, while Sen. Cynthia Lummis, a leading Republican advocate for the industry, is set to retire in January 2027.
New Jersey's reversal came under Democratic Gov. Mikie Sherrill, who voted for both the CLARITY and GENIUS bills as a House member. The state's Democratic senator, Cory Booker, also helped negotiate market structure legislation, though he opposed advancing CLARITY in September. The industry has sought to build support across party lines ahead of the midterms. Fairshake and its affiliated super PACs are backing 19 Republicans and 14 Democrats in House races, while New Jersey's Josh Gottheimer has also received crypto-industry support. The number of members of Congress with an A rating from advocacy group Stand With Crypto has risen to 332, up from 96 when the group launched in 2023, according to Reuters.