New Jersey's securities regulator has rescinded its 2023 cease-and-desist order against Coinbase's staking service, dropping a $5 million penalty and clearing the way for residents to stake new funds on the exchange for the first time in over three years.
The Oct. 30 notice, signed by Acting Bureau Chief Keith A. Alt, withdrew the order without prejudice and without a ruling on the merits. The wording leaves 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 Oct. 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's 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 ongoing case 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 Nov. 3 US midterm elections, with prediction markets favoring Democrats to win Senate control. 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 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.
Analysis
Why This Matters
- Signals a potential shift in state-level staking enforcement ahead of a pivotal election for the crypto industry.
- Restores staking access and potential rewards for New Jersey Coinbase users who have been locked out since 2023.
- Highlights the high political stakes of the midterms for crypto regulation, with key Senate committee chairs and market structure legislation on the line.
Background
In 2023, a ten-state task force led by California issued cease-and-desist orders against Coinbase's staking service. Staking lets users commit cryptocurrency to validate blockchain transactions in exchange for rewards. New Jersey was among the states that banned new staking. The crypto industry has since sought to build political support across party lines ahead of the 2026 midterms.
Key Perspectives
New Jersey Bureau of Securities: Rescinded the 2023 cease-and-desist order and $5 million penalty without prejudice, leaving the option for future enforcement open.
Coinbase: Welcomed the reversal, estimating New Jersey users missed out on over $15 million in rewards. CEO Brian Armstrong said staking access would return "very soon".
California and other task force states: Continue enforcement actions against Coinbase's staking, with California's case covering over 600,000 accounts and seeking significant penalties.
Industry advocacy groups (Fairshake, Stand With Crypto): Actively building political support across party lines, with the number of A-rated members of Congress rising to 332.
What to Watch
- The outcome of the Nov. 3 midterms and whether a Democratic Senate majority puts Senator Elizabeth Warren in line for the Banking Committee chairmanship.
- The progress of outstanding staking cases against Coinbase in California, Maryland, Wisconsin, and Washington.
- Whether the New Jersey Bureau of Securities files a fresh enforcement action against the exchange.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedNew Jersey rescinded Coinbase’s staking order and dropped its US$5 million penalty.Cointelegraph.com News: “New Jersey’s securities regulator has rescinded its 2023 cease-and-desist order against Coinbase’s staking service”
- SupportedCalifornia and three other states are still pursuing enforcement actions against Coinbase’s staking services.Cointelegraph.com News: “California, Maryland, Wisconsin and Washington are still pursuing enforcement actions against the exchange with cases against the its staking services.”
- SupportedNew Jersey’s 2023 order had stopped residents from staking new funds for over three years, and the rescission clears the way to restore access.Cointelegraph.com News: “lifting a ban that stopped residents staking new funds on the exchange for over three years.”
- SupportedThe Oct. 30 notice withdrew the order and penalty without prejudice and without a ruling on the merits.Cointelegraph.com News: “The Oct. 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.”
- SupportedThe Bureau of Securities remains free to bring a new enforcement action against Coinbase.Cointelegraph.com News: “The wording leaves the Bureau of Securities free to bring a fresh enforcement action against Coinbase in the future.”
- SupportedCoinbase said the regulator informed it on Oct. 29 of its plan to rescind the order.Cointelegraph.com News: “Coinbase disclosed the move in its third-quarter filing , stating the regulator informed the company on Oct. 29 of its plan to rescind.”
- SupportedCEO Brian Armstrong said New Jersey users would regain staking access “very soon”.Cointelegraph.com News: “CEO Brian Armstrong said New Jersey users would regain staking access “very soon”.”
- SupportedCalifornia led the ten-state task force behind the 2023 actions, which covered more than 600,000 accounts held by Californians.Cointelegraph.com News: “California led the ten-state task force behind the 2023 actions, which covered more than 600,000 accounts held by Californians.”
- SupportedCalifornia, Wisconsin and Maryland banned Coinbase from new staking while their cases proceeded; Washington allows staking and its case seeks a $4 million fine.Cointelegraph.com News: “Like New Jersey, California and Wisconsin and Maryland banned Coinbase from new staking while their cases ran. Washington’s regulator allows staking but the ongoing case seeks to impose a $4 million fine on the exchange.”
- SupportedCoinbase estimates California users missed out on over $89 million in staking rewards since 2023, compared with more than $15 million in New Jersey.Cointelegraph.com News: “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.”
- SupportedThe decision came ahead of the Nov. 3 US midterm elections, and prediction markets favored Democrats to win Senate control.Cointelegraph.com News: “The decision came ahead of the Nov. 3 US midterm elections, with prediction markets favoring Democrats to win the Senate control.”
- SupportedFairshake and its affiliated super PACs are backing 19 Republicans and 14 Democrats in House races.Cointelegraph.com News: “Fairshake and its affiliated super PACs are backing 19 Republicans and 14 Democrats in House races”
