New Jersey drops Coinbase staking order ahead of crypto’s midterm test
New Jersey's securities regulator has rescinded its 2023 cease-and-desist order against Coinbase's staking service, lifting a ban that prevented residents from staking new funds on the exchange for over three years.
The Oct. 30 notice, signed by Acting Bureau Chief Keith A. Alt, withdrew the order and its $5 million penalty without a ruling on the merits. This 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 confirmed that New Jersey users would regain staking access "very soon" following the regulator's decision. However, California, Maryland, Wisconsin and Washington are still pursuing enforcement actions against the exchange with cases against its staking services.
Staking Rewards Impact
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 led the ten-state task force behind the 2023 actions, which covered more than 600,000 accounts held by Californians.
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. 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.
Political Implications
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, with Fairshake and its affiliated super PACs backing 19 Republicans and 14 Democrats in House races.
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