The Alabama Securities Commission (ASC) has withdrawn its enforcement action against cryptocurrency exchange Coinbase concerning its staking rewards program, marking a significant development in the state-level regulation of digital assets. Announced in late April 2025, the decision comes amidst a shifting landscape where federal efforts to establish comprehensive cryptocurrency legislation appear to be gaining momentum under the current administration.
Alabama was part of a ten-state coalition that initiated coordinated actions against Coinbase in June 2023, alleging that the exchange’s staking-as-a-service offerings constituted unregistered securities. However, nearly two years later, that coalition has fractured. Alabama joins Illinois, Kentucky, South Carolina, and Vermont in pulling back from their respective enforcement efforts against the prominent US-based exchange in recent weeks.
ASC Commissioner Amanda Senn clarified that the withdrawal does not signify a softening of the agency’s commitment to market integrity or consumer protection. Instead, she positioned the move as a pragmatic decision driven primarily by the anticipation of federal action.
“By all accounts, a regulatory framework appears imminent, so it made sense for us to table our litigation posture and allow time for our policymakers to continue their good work,” Senn explained in an interview with Decrypt. She emphasized that pursuing state-level litigation simultaneously with advancing federal efforts could prove duplicative and costly for both taxpayers and the company.
Coinbase’s Chief Legal Officer, Paul Grewal, welcomed Alabama’s decision, stating on social media, “We’re halfway there,” referring to the five states that have now dropped their actions. He characterized the initial state efforts as “misguided” and criticized the five remaining states for continuing what he termed a “waste [of] taxpayer resources.”
Commissioner Senn pushed back against the notion that regulatory litigation is inherently wasteful, stressing the ASC’s readiness to pursue legal action if necessary. “Had we been further down the road [in our action against Coinbase], we may have proceeded,” she noted, adding that the decision “should not be taken by anyone that we will not litigate if an appropriate regulatory scheme is not adopted.”
A key factor influencing Alabama’s decision was the nature of its initial action. Unlike some states that issued cease-and-desist orders demanding an immediate halt to Coinbase’s staking activities, Alabama issued a “show-cause order.” Senn described this as more of a “vehicle for discussions,” allowing the regulator and the company to engage without forcing an immediate operational shutdown. At the time of withdrawal, the ASC was still in these early discussion phases with Coinbase, without having moved into active legal discovery.
“Some states have already expended significant resources toward litigation and were much further down the road,” Senn acknowledged. “Each jurisdiction should make its own decision about how it should proceed.” She recognized the novelty of crypto business models, stating, “I appreciate that this is new technology, and a different transmission process and rather unique business model,” which informed the initial choice of a show-cause order.
While acknowledging the pro-crypto stance of the current federal administration may influence the broader regulatory environment, Senn maintained that the ASC’s decision was primarily strategic, based on the likelihood of imminent federal rules and the specific procedural posture of Alabama’s case.
With experts anticipating a federal market structure bill potentially passing later in 2025, and lawmakers holding regular hearings and roundtables, the focus appears to be shifting towards Washington D.C. However, Senn underscored that Alabama’s regulators remain vigilant. Referencing historical crypto failures like the Mt. Gox exchange collapse, she affirmed the ASC’s ongoing mission to combat fraud and protect consumers within the state, regardless of the outcome of federal legislative efforts. The withdrawal is a pause pending federal clarity, not an abdication of regulatory responsibility.