According to a Citi investment analyst, crypto exchange Coinbase’s share price will “drag” until regulators establish legal “rules of the game” in the United States.
According to a May 1 note, the investment bank downgraded the exchange’s shares from “buy” to “neutral” and lowered its price target, citing “too many unknowns” as it faces a determined battle with US regulators. done.Screenshot of City analyst note. Spring: Twitter
“Until the ‘rules of the game’ are better established in the US, this high level of uncertainty will continue to weigh on stocks,” Citi analyst Peter Christiansen wrote in a May 1 note.
In March, Coinbase revealed that it had received a Wells notice from the Securities and Exchange Commission (SEC) for possible securities law violations, pointing to possible enforcement action down the road.
In April, Coinbase hit back at the SEC, filing a lawsuit in federal court to force the agency to clarify its regulatory treatment of certain digital assets.
At the end of the month, Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal posted public responses to the March Wells notice on YouTube.
“As it stands, both the short-term and long-term discussions begin and end with the Coinbase regulatory issue,” Christiansen said, noting that the regulatory battle could go several ways:
“The clarity could come from: (i) a protracted legal process against the SEC, where the possibility of an operational injunction cannot be ruled out, (ii) a challenging legislative calendar and the upcoming election year amid long-awaited steps, and/or even (iii) the current Ripple legal process, which could potentially set a precedent,” the analyst wrote.
The analyst said the recent developments from the SEC do not indicate that the parties are close to a resolution.
As of this writing, Coinbase is trading at $51.32, down 58.5% from a year ago, according to Yahoo Finance.
Its share price fell nearly 16% on 22 March after disclosing that it had received a Wells notice.
The company has recently been the subject of two class action lawsuits, one alleging that it violated Illinois privacy laws by collecting biometric data from its customers, and the other alleging that certain executives withheld inside information when the company went public. benefitted.
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