Coinbase Chief Legal Officer Paul Grewal Reacts to Vermont’s Withdrawal of Coinbase Case After SEC’s Retreat!

Vermont has dropped its “show cause order” against Coinbase, signaling a shift in cryptocurrency regulation. The state rescinded its decision after the SEC crypto lawsuit against Coinbase was tossed. They acknowledged that new federal guidelines would soon clarify crypto regulations. As a result, legal battles at the state level are becoming unnecessary. Coinbase’s chief legal officer, Paul Grewal, reacted to the news, urging other states to follow Vermont’s lead and reaffirming that staking services should not be classified as securities. 

Crypto Lawsuits Crumble: Vermont Follows SEC’s Lead

Vermont, one of the states in the USA, has stopped its “show cause order” related to the crypto corporation Coinsbase. The Vermont Coinbase case was started because of doubts that this crypto exchange had used stacking to provide unregistered securities. The lawsuit argued that Coinsbase had broken securities law by providing a stacking service without the needed license. The “show cause order” directed Coinsbase to present a convincing reason to the court, reasoning why it should not be closed. Now, however, Vermont’s Department of Financial Regulation has reacted to the SEC’s decision to drop its case against Coinbase. 

The order stated, “The SEC has announced the formation of a new task force to, among other things, provide guidance for the promulgation of rules regarding the regulation of cryptocurrency products and services.”. The Department also mentioned that it’s dropping its case because the US Securities and Exchange Commission tossed its lawsuit on February 28. “In light of the dismissal of the Federal Action and the likelihood of new federal regulatory guidance, the Division believes it would be most efficient and in the best interests of justice to rescind the pending Show Cause Order, without prejudice.” 

Coinbase Legal Battle: Why U.S. States Dropping Lawsuits

This development comes after many US states’ lawsuits against Coinbase were coordinated to coincide with the SEC crypto lawsuit. Other than Vermont, at least nine other States started their Lawsuit on this date. The lawsuit announcements against Coinbase happened on the same day that the SEC filed a lawsuit in June 2023. So, it is logical for the states to drop their cases without the backing of the SEC. 

Pro-Crypto Momentum Grows: Will Congress Take Action?

Coinbase chief legal officer Paul Grewal reacted to the news of the Vermont Coinbase case on his X account. In a social media post, he urged other US states to follow Vermont in relation to the stacking cases. He explicitly asked these institutions to take a page from Vermont’s playbook. He also stressed that the exchange’s stand on this problem has always been that staking should not be considered securities. Moreover, he applauded the state of Vermont for its step towards more regulatory clarity for citizens and crypto users.

Today the State of Vermont dismissed its action against @Coinbase regarding staking services. As we have always said: staking services are not securities. We applaud Vermont for embracing progress and providing clarity for its citizens who own digital assets. 1/3

— paulgrewal.eth (@iampaulgrewal) March 13, 2025

He continued his statement by explaining that Congress must also strive for clarity as a bipartisan pro-crypto momentum is present. He urges the House and the Senate to work on legislation that considers the difference between digital assets and traditional assets. These differences were named “novel features of digital assets, such as staking.”. As this statement addresses, the new government officials appointed under Trump have shown crypto-friendly stances. The growing number of crypto-related cases dropped by the SEC is also because of this department’s new leadership.

Regulatory Reset? What Vermont’s Move Represents

Vermont’s decision to withdraw its case against Coinbase highlights a major shift in U.S. crypto regulations. More states may drop cases, following Vermont’s example, while awaiting federal regulatory clarity. Crypto firms could seize this moment to push for clearer distinctions between digital assets and traditional securities. Industry leaders can also advocate for tailored laws that better fit digital assets. If Congress enacts comprehensive rules, the crypto sector could gain legitimacy and investor trust.