New Jersey Lifts Coinbase Staking Ban and $5M Penalty

New Jersey’s securities regulator has withdrawn its 2023 cease-and-desist order against Coinbase’s staking service, ending a more than three-year prohibition on new staking deposits and canceling an associated $5 million penalty. Acting Bureau Chief Keith A. Alt signed the Oct. 30 notice, which rescinded the order without prejudice and without a ruling on the merits, leaving the bureau free to pursue a new enforcement action.

Coinbase disclosed the decision in its third-quarter filing, saying regulators informed the company on Oct. 29 of their plans to rescind the order. CEO Brian Armstrong said New Jersey users would regain access to staking “very soon.” The service allows customers to commit cryptocurrency to help validate transactions and secure a blockchain in exchange for rewards, with Coinbase taking a percentage of those rewards.

New Jersey is not the last state to challenge Coinbase’s staking operations. California, Maryland, Wisconsin and Washington continue to pursue enforcement actions. California led the 2023 enforcement effort, which affected more than 600,000 accounts and included a ban on new staking deposits. Washington permits staking but is seeking a $4 million fine. Coinbase estimates that California users have missed more than $89 million in rewards since 2023, compared with over $15 million in New Jersey.

The reversal comes ahead of the Nov. 3 U.S. midterm elections and a closely watched battle over federal crypto legislation. A Democratic Senate majority could place Sen. Elizabeth Warren, a prominent industry critic, in line to chair the Senate Banking Committee, while pro-crypto Sen. Cynthia Lummis is scheduled to retire in January 2027. New Jersey Gov. Mikie Sherrill supported the CLARITY and GENIUS bills during her time in the House, while Sen. Cory Booker helped negotiate market-structure legislation but opposed advancing CLARITY in September.