Coinbase staking gets a Jersey reprieve as midterm crypto chess heats up

New Jersey’s securities regulator has rescinded its 2023 cease-and-desist order against Coinbase’s staking service, lifting a three-year prohibition on new deposits for residents. 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, leaving the Bureau of Securities free to bring a fresh enforcement action against Coinbase in the future. Coinbase disclosed the rescission in its third-quarter filing, saying the regulator informed the company on Oct. 29 of its plan to withdraw the order. CEO Brian Armstrong said New Jersey users would regain staking access “very soon.”

California, Maryland, Wisconsin and Washington are still pursuing enforcement actions concerning Coinbase’s staking services. California led the 10-state task force behind the 2023 actions, which covered more than 600,000 accounts held by Californians. California, Maryland and Wisconsin banned new staking on Coinbase while their cases continued, while Washington allows staking but is seeking a $4 million fine. Coinbase estimates that California users have missed more than $89 million in staking rewards since 2023, compared with 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 control of the Senate. A Democratic majority would place 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. Democratic Sen. Cory Booker also helped negotiate market-structure legislation, although he opposed advancing CLARITY in September.

The industry has sought support across party lines as crypto’s federal legislative push stalled before the vote. Fairshake and its affiliated super PACs are backing 19 Republicans and 14 Democrats in House races, while New Jersey Rep. Josh Gottheimer has also received crypto-industry support. The number of members of Congress holding an A rating from advocacy group Stand With Crypto has risen to 332 from 96 when the group launched in 2023, according to Reuters.