South Carolina Drops Lawsuit Against Coinbase and Pushes for Bitcoin Reserve

South Carolina formally dropped its case against Coinbase for its alleged staking services. The state Attorney General’s securities division dropped the case by agreement on March 27, a major victory for the crypto exchange. This comes after Vermont earlier dropped its respective action, making South Carolina the second state to drop out of the legal fight.

Coinbase’s lead attorney, Paul Grewal, announced on social media (X formerly Twitter), with the hope that other states would be inspired to follow South Carolina’s example. Ten U.S. states, such as Vermont and South Carolina, originally sued Coinbase on June 6, 2023. This was the same day that the U.S. Securities and Exchange Commission (SEC) sued the company. The SEC officially dropped its case on February 27, 2025, which could be a regulatory change of heart on crypto staking.

What This Means for Crypto Staking in the U.S.

The lawsuit accused Coinbase of offering unregistered securities through its staking services. Staking allows individuals to earn rewards for locking in their crypto assets, something that has been subject to fierce regulatory pressure. The regulatory uncertainty caused hassle for Coinbase customers in affected states, with users in South Carolina allegedly missing out on an estimated $2 million in staking rewards due to the prohibition.

Paul Grewal emphasized the need for “commonsense consumer protections and clear rules” in the crypto space. He also applauded South Carolina for “standing up for justice” and encouraged other states still enforcing staking bans to reconsider their stance. The eight remaining states, Alabama, California, Illinois, Kentucky, Maryland, New Jersey, Washington, and Wisconsin, have yet to make a move on their lawsuits.

South Carolina Proposes Bitcoin Reserve Bill

In a stunning turn of events, South Carolina not only is distancing itself from crypto restrictive measures but is also on the verge of embracing Bitcoin at a state level. On March 27, state representative Jordan Pace introduced the Strategic Digital Assets Reserve Act of South Carolina, a bill enabling the state to invest up to 10% of certain state funds in crypto assets like Bitcoin.

Unlike most state crypto reserve bills, this bill directly refers to Bitcoin multiple times. If enacted, it would allow South Carolina Treasurer Curtis Loftis to create a Bitcoin reserve with a maximum capacity of a staggering 1 million BTC. This is part of a larger national trend, as even the U.S. federal government has started constructing its own Strategic Bitcoin Reserve.

The Growing Trend of State-Level Bitcoin Reserves

The presentation of Bitcoin reserve bills is becoming more prevalent across the United States. There are 42 bills presented across 19 states, with 36 of the bills still active. The bills reflect a growing realization of the possible contribution of Bitcoin to the upkeep of financial stability and economic planning.

South Carolina’s proposed reserve wouldn’t be limited to Bitcoin alone, but no specific mention of stablecoins, Ethereum, or NFTs was included in the bill. If it passed, it would allow Bitcoin to be added to various state funds, including the General Fund and the Budget Stabilization Reserve Fund.

The Federal Push for Bitcoin Reserves

On a national level, President Donald Trump has also stepped into the crypto space. Earlier this month, he signed an executive order to create both a Strategic Bitcoin Reserve and a Digital Asset Stockpile. These reserves will be initially funded with cryptocurrency forfeited in government criminal cases.

With federal and state governments showing increased interest in Bitcoin, it’s clear that crypto is no longer just a niche investment but a key asset in financial planning. As more states reevaluate their stance on digital assets, the future of crypto adoption in the U.S. looks increasingly promising.