New Jersey’s securities regulator has withdrawn its cease-and-desist order and $5 million penalty against Coinbase’s staking service, a move that allows the cryptocurrency exchange to restore staking access for users in the state. The order was rescinded “without prejudice,” a legal term indicating that the Bureau of Securities can initiate a new enforcement action against Coinbase in the future.
Coinbase disclosed the development in its third-quarter filing, stating that the regulator informed the company on October 29 of its plan to rescind the order, which was officially withdrawn on October 30. Coinbase CEO Brian Armstrong indicated that New Jersey users would regain staking access “very soon.”
This regulatory action in New Jersey contrasts with ongoing enforcement efforts in other states. California, Maryland, Wisconsin, and Washington continue to pursue legal actions against Coinbase’s staking services. While Washington’s regulator permits staking, it is seeking a $4 million fine. California, Wisconsin, and Maryland had previously banned Coinbase from facilitating new staking activities during their respective cases.
Cryptocurrency staking involves users committing digital assets to support a blockchain’s operations in exchange for rewards. Coinbase manages this process for customers, taking a fee from the earned rewards. According to Coinbase estimates, users in California have missed out on over $89 million in staking rewards since 2023, while New Jersey users have missed an estimated $15 million.
The timing of New Jersey’s regulatory shift, occurring shortly before the November 3 US midterm elections, has drawn attention. Prediction markets currently favor Democrats to win control of the Senate. A Democratic majority could position Senator Elizabeth Warren, a vocal critic of the cryptocurrency industry, to chair the Senate Banking Committee. Meanwhile, Senator Cynthia Lummis, a Republican advocate for the industry, is slated to retire in January 2027.
New Jersey’s regulatory reversal occurred under Democratic Governor Mikie Sherrill. As a former House member, Sherrill voted for legislation related to the crypto industry. New Jersey’s Democratic Senator Cory Booker has also been involved in negotiating market structure legislation, though he opposed advancing the CLARITY bill in September.
The cryptocurrency industry has been actively seeking bipartisan support ahead of the midterms. Organizations like Fairshake and its affiliated super PACs are backing candidates from both parties in House races, and New Jersey’s Representative Josh Gottheimer has also received support from the crypto industry. The advocacy group Stand With Crypto reports that the number of members of Congress holding an “A” rating from the organization has grown to 332, up from 96 in 2023, according to Reuters.
Despite the withdrawal of the order in New Jersey, the broader regulatory landscape for cryptocurrency staking in the United States remains uncertain. The “without prejudice” nature of the rescission means New Jersey could pursue future actions, and the outcomes of ongoing cases in other states are yet to be determined.
Why This Matters
The materials describe a narrow update: New Jersey’s securities regulator withdrew a previous order that had banned Coinbase’s staking services and imposed a $5 million penalty. The New Jersey Bureau of Securities may bring a fresh enforcement action against Coinbase in the future.
Broader Context
Source materials place the factual news in this context: New Jersey lifted its staking ban and dropped a $5 million penalty, clearing the way for Coinbase to restore staking access for users in US state.
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