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According to investment analysts at Citi, the stock price of the cryptocurrency exchange Coinbase will continue to be “weighted down” until regulators establish legal “rules of the road” in the United States.
According to reports on May 1, the investment bank downgraded the stock of the cryptocurrency exchange from Buy to Neutral and lowered its target price, citing “too many unknowns” as the company fights with regulators.
“Until U.S. regulatory ‘rules of conduct’ are better established, stocks will remain under pressure from this high level of uncertainty,” Citi analyst Peter Christiansen wrote in a May 1 note.
In March, Coinbase reported that it had received a Wells notice from the Securities and Exchange Commission (SEC) of possible violations of securities laws, indicating possible future enforcement action.
In April, he responded to the SEC by filing a lawsuit in federal court ordering the SEC to provide clarity on the regulation of certain digital assets.
Later that month, Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal posted a public response to the March Wells notice on YouTube.
1/ Today we’re sharing our “Wells response” to the SEC. as part of our response, @impaulgrewal and I sat down to explain why we’re confident in the facts and on the law, and why a Wells notice is not in the best interest of the US. https://t.co/zkNaWGgtcK
— Brian Armstrong ️ (@brian_armstrong) April 27, 2023
“As it stands, both long and short debates start and end with Coinbase’s regulatory predicament,” Christiansen said, noting that there could be multiple ways to play out the regulatory fight:
“Clarity could come from: (i) a lengthy litigation against the SEC where the possibility of an expeditious injunction cannot be ruled out, (ii) a long-awaited legislative move in the face of a challenging legislative calendar and an upcoming election year, and/or even (iii) an ongoing Ripple lawsuit. , which could potentially set a precedent,” the analyst wrote.
The analyst noted that recent SEC events do not indicate that the parties are close to any solution.
Related: Coinbase Plans to Build a Cryptocurrency Trading Platform Outside the US: Report
As of this writing, Coinbase is trading at $51.32, down 58.5% from last year, according to Yahoo Finance.
Its share price fell about 16% on March 22 after the company said it had received Wells’ notice.
The company has recently been the target of two proposed class-action lawsuits, one alleging that it violated privacy laws in Illinois for collecting customer biometric data, and the other alleging that some executives profited from insider information when the company went public.
