The Alabama Securities Commission, a financial regulator for the US state, dropped its lawsuit against crypto exchange Coinbase, which accused the company of violating securities laws by offering staking services to clients.

The regulator cited the ongoing work between the US Securities and Exchange Commission (SEC) and the crypto industry to develop clear crypto regulations as the primary reason for dropping the litigation, according to the April 23 legal filing shared by Coinbase’s chief legal officer, Paul Grewal.

The filing read:

“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.”

“Due to the foregoing, the Commission believes it would be apt to allow policymakers time to consider regulatory constructs,” the filing continued.

The Alabama Securities Commission filed its lawsuit against Coinbase in June 2023, alongside state regulators from California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington, and Wisconsin.

The Alabama Securities Commission dismisses its 2023 lawsuit against Coinbase. Source: Paul Grewal

The Commission’s dropped lawsuit reflects the positive regulatory shift toward cryptocurrencies in the United States as reform at the federal level matriculates into state-level regulatory policy.

Related: Oregon targets Coinbase after SEC drops its federal lawsuit

US states drop Coinbase lawsuit but half still holding out

Five of the 10 states that filed the litigation against Coinbase for its staking services have dropped their lawsuits.

On March 13, Vermont’s Department of Financial Regulation became the first of the 10 state regulators to drop the staking lawsuit against Coinbase.

South Carolina’s securities watchdog was the next to drop the 2023 litigation against Coinbase, dismissing the lawsuit on March 28.

Grewal announced that Kentucky’s Department of Financial Institutions followed Vermont and South Carolina’s lead on April 1 by also dismissing its Coinbase lawsuit.

Despite the domino effect of states rescinding litigation against the crypto exchange, the Coinbase chief legal officer said that more work needs to be done.

“Five holdouts are still electing to waste taxpayer resources on lawsuits, and four of those have banned staking with Coinbase, depriving consumers of the right to earn on their platform of choice,” Grewal wrote in an April 23 X post.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered