Coinbase CLO Paul Grewal slams state agencies for ignoring the CLARITY Act’s exclusion of staking from securities laws, urging regulatory alignment.
Coinbase Chief Legal Officer Paul Grewal redirects attention to a critical issue—state agencies’ refusal to recognize the crypto staking guidance of the CLARITY Act—as the crypto industry celebrates the GENIUS Act’s passage. Despite the CLARITY Act’s explicit stance on staking-as-a-service as a non-security, numerous state agencies continue prosecuting claims against crypto firms. This discrepancy has led Grewal to advocate for a more unified regulatory approach.
CLO of Coinbase Alleges That State Agencies Neglect the Critical Provision of the CLARITY Act
In a recent X post, Coinbase CLO Paul Grewal emphasized the discrepancy between the staking guidance of the CLARITY Act and the enforcement actions of state agencies. Grewal asserts that state agencies refuse to recognize staking-as-a-service as a non-security practice, despite the CLARITY Act’s explicit identification of this practice as such. The text of his post was as follows:
I gotta call out one critical provision of CLARITY Act that hasn’t received the attention it is due: staking-as-a-service is confirmed as a non-security and rule-making is ordered.
This development is particularly noteworthy in light of the historic passage of the landmark GENIUS and CLARITY Acts. The GENIUS Act was passed with an even stronger margin of 308 to 122, while the CLARITY Act received bipartisan support with 294 ballots in favor and 134 against.
Grewal notes that five states—California, New Jersey, Washington, Maryland, and Wisconsin—are pursuing baseless claims against Coinbase in defiance of the CLARITY Act’s explicit guidance. He also notes that this posture opposes the 32 Congressional Democrats from the same states who voted in favor of the bill.
Additionally, Grewal underscored the necessity of abandoning the state’s inconsistent regulations. He encouraged Congress to adopt unambiguous, bipartisan crypto regulations and expressed optimism that the Senate would act promptly on the legislation. He penned,
It’s time to end this patchwork of state regulation by enforcement and align with Congress on clear, bipartisan crypto rules. Coinbase looks forward to the Senate taking swift action on the legislation.
Staking is not subject to securities laws under the CLARITY Act
Intriguingly, the Coinbase CLO’s assertion is predicated on the CLARITY Act, which explicitly excludes staking from securities regulations. The bill categorizes staking-as-a-service as a non-security service. By implementing this provision, DeFi protocols are anticipated to operate with increased assurance, providing services such as staking and lending within a more transparent regulatory framework.
Nevertheless, Paul Grewal has noted that this provision is not widely recognized. Consequently, it necessitates the implementation of rulemaking to enhance the clarity and regulation of this domain. This decision is expected to significantly influence staking services’ future, providing providers and consumers with increased regulatory certainty.
It is important to note that Coinbase has consistently advocated for transparent cryptocurrency regulations. Coinbase has recently appointed David Plouffe, a former adviser to Kamala Harris and Barack Obama, to its advisory board as part of its new strategy. As the crypto industry navigates a complex landscape with the GENIUS Act’s progress and the CLARITY Act’s uncertain future, the platform is currently stepping up its lobbying efforts, focusing on key Democratic legislators.
