Coinbase is pressing the US Department of Justice to step in and stop individual states from enforcing crypto regulations that clash with national policy.
In a formal letter, the exchange asked federal authorities to preempt state laws it says are stifling innovation and hurting consumers.
He pointed to Oregon’s ongoing lawsuit against Coinbase as a prime example of the problem. “When Oregon can sue us for services that are legal under federal law, something’s broken,” Grewal said on social media, arguing that the current regulatory setup hampers progress and adds legal risk for businesses.
Chief Legal Officer Paul Grewal criticized what he described as a confusing patchwork of state-level crypto rules, accusing states of relying on broad and inconsistent interpretations of securities law.
This came just two months after the SEC dropped its own case against the company, which had alleged that Coinbase operated as an unregistered broker and exchange. Rayfield defended the action, stating that federal regulators were retreating from enforcement under the new administration and leaving gaps that states are now forced to fill.
Oregon Attorney General Dan Rayfield filed suit against Coinbase in April, accusing the exchange of promoting unregistered securities in the state.
Founded in 2012, Coinbase entered the S&P 500 this year and now boasts a market cap of $83 billion. Its shares have surged 70% since Donald Trump’s election, thanks in part to his administration’s crypto-friendly stance. However, second-quarter earnings disappointed, and the stock dropped 15%, signaling investor caution.
As reported, Coinbase is racing to stay ahead of a wave of new competitors as it pivots from being a pure crypto exchange to a broader financial services platform.
Fee compression and competition from Asian exchanges are also eating into its margins.
Coinbase has secured its position as custodian for eight of the top 11 US Bitcoin ETFs, earning $43 million in the last quarter of 2024 from that alone.
A growing concern is the company’s exposure to the price of Bitcoin. Trading fees, still the core of Coinbase’s revenue, rise and fall with crypto market volatility.
