Shares in cryptocurrency exchange Coinbase will remain "under pressure" until regulators create legal "rules of the road" in the US, analysts at Citi Investments said.
The investment bank downgraded the cryptocurrency exchange's stock rating to “neutral” from “buy” and lowered its price target, citing the company's battle with regulators, according to reports on May 1. "Too many unknowns". "Until the US better establishes regulatory 'rules of the road,' the stock will continue to be weighed down by this heightened uncertainty," Citi analyst Peter Christiansen wrote in a May 1 note.
In March, Coinbase revealed that it had received a Wells notice from the SEC about possible violations of securities laws heralding possible future enforcement action. In April, Coinbase hit back at the SEC, filing a lawsuit in federal court to force the SEC to clarify its regulatory treatment of certain digital assets. Later this month, Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal posted a public response to Wells' notice on YouTube. “As it stands, both the long and short-term debates begin and end with Coinbase's regulatory woes,” Christiansen said, noting that the regulatory melee could end in several ways:
"Clarity is likely to come from: (i) the lengthy legal process with the SEC, where enforcement of the ban cannot be ruled out, (ii) the long-awaited legislative campaign amidst a challenging legal calendar and upcoming election year, and/ even (iii) Ripple's ongoing legal proceedings, which could set a precedent," the analyst wrote. The analyst pointed out that the latest developments from the SEC do not indicate that the two sides are close to reaching any resolution.
At the time of writing, Coinbase was trading at $51.32, down 58.5% over the past year, according to Yahoo Finance. Its stock price plummeted about 16% on March 22 after it disclosed that it had received the notification from Wells. The company was Recently the target of two proposed class-activity, one alleging that ites collection of Customer biometric information, He Other Accusing Certain Executives of the Company of Gaining Access to Information when the company public. Profit. Profit. Profit. Profit.
