Key Takeaways:
- California users have missed an estimated $110 million in staking rewards since the state restricted Coinbase’s staking services in 2023.
- Coinbase argues that staking is not a security and says no user has ever lost assets by staking on its platform.
- The exchange is urging California regulators to align with 46 other U.S. states and support a clear federal staking framework.
Coinbase has intensified its public campaign to restore crypto staking services for California users, highlighting what it calls a costly and unnecessary restriction that has already deprived residents of substantial income.
Coinbase Ramps Up Pressure Over California Staking Ban
Since June 6, 2023, California residents have been unable to access Coinbase’s staking services after state regulators moved to restrict the offering. While users in 46 other states continue to earn staking rewards through the platform, Californians remain locked out.
Coinbase says the impact is no longer theoretical. According to the company, users in California have missed out on roughly $110 million in potential staking rewards over the past two years. The exchange frames the figure as lost income for everyday crypto holders rather than a benefit to Coinbase itself.
In a series of public posts, Coinbase stressed three core claims: staking is not a security, customers have never lost assets through Coinbase staking, and California residents are being treated unfairly compared with users elsewhere in the U.S.
The company is now directly urging Californians to contact state officials and demand an end to what it calls a “misguided” policy.
Read More: Coinbase Enables All Solana Token Trading for 100M Users in Major On-Chain Expansion
Why California Stands Apart From Most of the U.S.
The dispute traces back to actions taken by the California Department of Financial Protection and Innovation, which issued a desist-and-refrain order against certain staking products in mid-2023. Regulators argued that staking services could fall under securities laws, requiring additional registration and oversight.
Coinbase strongly disagrees with that interpretation. The company maintains that staking simply allows users to participate in blockchain consensus mechanisms and earn protocol-level rewards, not profits generated by Coinbase’s efforts.
From Coinbase’s perspective, California has become an outlier. Almost all other states in the U.S. allow staking under their jurisdictions, and no similar enforcement proceedings have caused consumer losses on a mass level.
The $110 Million Question: What Users Actually Lost
The $110 million loss calculated by Coinbase is representative of the cumulative reward possible for California residents since 2023, had they continued to benefit from the service. Although the individual losses are difficult to quantify, the total significance highlights the importance of rewards, especially during times of high network rewards.
The staking reward system generally operates as an incentive system that allows the long-term holding community to hedge market volatility or as a passively earned income mechanism that incentivively reinvests funds in other cryptocurrencies. California consumers are thus left with the choice to forego staking or look elsewhere than Coinbase.
That shift introduces additional friction, especially for retail users who prefer regulated, U.S.-based platforms over offshore or self-custody solutions that require greater technical expertise.
Read More: Coinbase Makes Its Biggest Solana Push Yet with Strategic Acquisition of Vector’s Trading Tech
Staking, Securities, and the Regulatory Gray Zone
At the center of the dispute is a familiar question in U.S. crypto regulation: whether staking services should be treated as securities offerings.
Coinbase argues the answer is no. According to the company, staking rewards come directly from blockchain protocols, not from managerial or entrepreneurial efforts by Coinbase. Users retain ownership of their assets, and Coinbase acts only as a technical facilitator.
The exchange also emphasizes its track record. Since launching staking services, Coinbase says no customer has lost assets due to staking, a point it uses to counter claims that consumers need protection from the product.
Regulators, however, have taken a more cautious view. California’s stance reflects broader concerns about consumer disclosures, risk transparency, and whether intermediated staking introduces new layers of obligation under securities law.
Patchwork Rules vs. a Federal Framework
Coinbase says the California case illustrates why state-by-state enforcement is no longer workable. In its view, crypto users should not lose access to the same financial tools simply because they cross state lines.
The company is calling for a clear federal framework that defines staking once, applies consistently nationwide, and removes the uncertainty created by overlapping lawsuits and enforcement actions.