Illinois Joins Others in Dropping Coinbase Lawsuit
Kentucky, Vermont and South Carolina have already withdrawn their cases after the SEC abandoned the staking lawsuit in February this year.
Illinois has made a U-turn in its stance towards crypto — dropping its lawsuit against Coinbase's staking program whilst simultaneously pushing legislation to create a state-backed Bitcoin reserve.
"[Illinois] intends to drop the Coinbase lawsuit," a spokesperson for Illinois Secretary of State Alexi Giannoulias confirmed yesterday.
It started in February when the Securities and Exchange Commission (SEC) dropped its federal staking suit against Coinbase. The case that once threatened to classify staking rewards as securities suddenly vanished from court dockets.
Now, four states that originally sued Coinbase in 2023 have followed suit.
February 2025: SEC abandons its staking lawsuit
March 2025: Kentucky and Vermont withdraw their cases
Late March: South Carolina follows suit
April 2025: Illinois announces plans to drop its lawsuit
Why now? The answer might lie in who sits in the White House.
Since US President Donald Trump took office, pro-crypto policies have swept through Washington faster than Bitcoin's January rally. From executive orders establishing a national digital asset stockpile to Trump's cryptocurrency reserves announcements, the regulatory atmosphere has undergone a seismic shift.
When the federal enforcer backs down, states naturally reassess their positions.
Not everyone is convinced.
Seven states — Alabama, California, Maryland, New Jersey, Washington, and Wisconsin — continue their legal crusade.
"The Coinbase matter remains open," a New Jersey Bureau of Securities representative told CoinDesk on Wednesday, while Washington's Securities Administrator Bill Beatty confirmed their case "remains ongoing at this time."
"Congress to replace the current 'state-by-state' legal battles with clear federal regulations," said Paul Grewal, Coinbase's Chief Legal Officer.
For the broader ecosystem, this regulatory retreat unlocks several positive developments.
Reduced legal uncertainty might attract institutional investors previously deterred by regulatory risk.
Developers can create new staking protocols without immediate fear of securities violations.
As regulatory clarity improves, traditional financial institutions may accelerate their crypto integration plans.
More states could follow Illinois in building Bitcoin reserves — mirroring Trump's national strategy.
Coinbase investors have already responded, pushing the stock up nearly 5% since the Illinois news broke — though it remains far below its 2021 highs.
The legal retreat we're seeing might be less about embracing blockchain's brilliance and more about political calculation in a pro-crypto administration.
For now, though, the direction is clear: regulators are starting to see crypto less as a threat to tame and more as an opportunity to embrace.
And that might be the most bullish signal of all.