After the SEC's lawsuit against Bitcoin exchange Coinbase, 10 different states of the USA sent a notification to Coinbase.
The Alabama Securities Commission (ASC) said in a statement today that it, along with nine state regulators, has sent a disclosure notice to Coinbase and asked Coinbase to clarify certain issues.
These states include Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin.
Alabama alleges in this notice that Coinbase did not register to offer or sell securities and violated securities law by offering a staking rewards program to Alabama residents.
This notice of ASC does not prohibit Coinbase from offering staking as a service as long as it complies with Alabama law, however Coinbase does offer staking services illegally.
ASC President Amanda Senn said:
“Part of the purpose of recording securities trading is to ensure that investors receive all the material information necessary to assess the risks of participating in an investment, including a staking rewards program.
In this context, ASC is committed to protecting Alabama consumers and investors, including those who choose to invest in decentralized finance.
This notice to Coinbase is another step towards ensuring that investors in cryptocurrency products are offered the same protections under our law and are fully aware of the risks involved in these investments.
Unlike banks and traditional brokerages, Coinbase's approximately 3.5 million staking rewards program accounts nationwide are not insured by the FDIC or SIPC.
In this context, these accounts have no means of hedge against possible loss, including the more than 33,000 accounts currently held by Alabama investors.
Investors are advised to contact ASC to verify the registration status of a staking rewards program before depositing their funds."
In its ASC notice, Coinbase said it had 28 days to explain to ASC its reasons for not stopping its staking program and that it did not violate federal securities laws.
