Securities Regulation Daily Wrap Up, BLOCKCHAIN—Coinbase urges DOJ to support federal preemption of state laws, shield crypto from states’ oversight, (Sep 17, 2025)
Coinbase asked the DOJ to urge Congress to “sharpen” pending crypto legislation to strengthen proposed federal preemption of state laws.
The Department of Justice should submit a views letter urging Congress to adopt broad preemption provisions in any market-structure legislation, crypto giant Coinbase said in a new comment letter responding to a DOJ call for information on the impact of state laws.
Coinbase said states have “weaponized their blue-sky laws to restrict Americans’ access to the national crypto market through onerous and unlawful cease-and-desist orders.”
Coinbase specified that DOJ should tell Congress that both digital assets and crypto intermediaries should be excepted from state regimes.
“Any preemption provision should characterize federally regulated digital assets as exempt from state blue-sky laws, make clear that new state licensing and other state regulatory requirements do not apply to crypto intermediaries, and apply retroactively,” Coinbase wrote.
Coinbase also urged DOJ to encourage the SEC to adopt rules foreclosing the application of state laws to crypto.
“The Department also should urge the SEC to promptly issue rules and provide Commission guidance explaining why digital-asset transactions and services (like staking) are not securities, which would make it more difficult for States to adopt contrary positions under their similarly worded state laws,” said Coinbase.
DOJ Request for Information. Coinbase was responding to a Request for Information by the DOJ and National Economic Council about state laws “significantly and adversely affecting the national economy or interstate commerce” along with suggested solutions that could address such effects (Request for Information on State Laws Having Significant Adverse Effects on the National Economy or Significant Adverse Effects on Interstate Commerce (Docket No. OLP182, 90 Fed. Reg. 39427, Aug. 15, 2025).
State crypto actions. Coinbase said states have “distorted their blue-sky laws to balkanize the national crypto market.”
Coinbase cited examples of “aggressive” state actions:
The Oregon Attorney General sued Coinbase, asserting that many digital assets on Coinbase’s exchange are unregistered securities and expressly calling upon other states to “fill” a purported “enforcement vacuum being left by federal regulators”;
The New York Attorney General launched a suit seeking to regulate as “securities” under New York law even transactions in digital assets based on decentralized protocols;
Four states (New York, California, Illinois, and Louisiana) have enacted licensing regimes that require crypto companies to obtain licenses from state agencies to operate within the states;
Multiple states have issued cease-and-desist orders prohibiting Coinbase from offering retail staking services, including California, Maryland, New Jersey, and Wisconsin.
Coinbase said the cease-and-desist orders “cannot stand.” According to the crypto firm, they violate Coinbase’s due process rights and undermine federal policy, including SEC staff guidance on crypto staking. They also impose disparate access to crypto products and services among Americans and significant compliance costs on regulated entities, Coinbase said.
Coinbase also objected to state “attacks on self-custody” and “onerous crypto licensing regimes designed to undermine the administration’s regulatory policies.”
Federal preemption. Coinbase urged DOJ to submit a views letter to Congress supporting federal preemption of state laws as applied to digital assets and crypto intermediaries.
Coinbase said it endorses both the House CLARITY Act bill and the Senate discussion draft (RFIA) for their proposed approaches to preempt the application of state blue-sky laws to digital assets. It said the latter in particular “provides an excellent template.”
Coinbase said that any crypto legislation should:
Preempt not only state blue-sky laws but also state licensing, registration, and other regulatory requirements as applied to crypto intermediaries;
Expressly provide that the bills’ preemption provisions apply not only prospectively, but also to any effort to impose liability for transactions made before the legislation’s effective date.
Finally, Coinbase encouraged DOJ to urge the SEC to “promptly issue rules and provide Commission guidance explaining in more detail what Chairman Atkins has already publicly recognized—that ‘most crypto assets are not securities.’”
According to Coinbase, this would make it more difficult for states to “manipulate their blue-sky laws to cover those same transactions and services.” While the SEC has indicated that it will begin rulemaking on these issues, “time is of the essence in light of the ongoing, anti-crypto enforcement campaigns by states like Oregon.”
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