The Impact of Hamas’ Use of Cryptocurrency on Coinbase’s Lobbying Efforts
A recent investment report from Berenberg Capital Markets suggests that the use of cryptocurrency by Hamas militants to fund attacks on Israel may have hindered Coinbase’s lobbying efforts in the United States. According to Berenberg lead analyst Mark Palmer, regulatory actions against Coinbase and political headwinds stemming from the Israel-Hamas conflict are the primary reasons for his cautious stance on the company.
Israeli Crackdown on Crypto Exchanges
Israeli authorities recently shut down and seized over 100 accounts on Binance and other crypto exchanges that were being used by Hamas for fundraising purposes. As part of this crackdown, millions of dollars worth of cryptocurrency were seized. Although Hamas had previously announced that it would no longer use crypto for fundraising due to blockchain tracking capabilities, these recent headlines are likely to complicate the legal status of cryptocurrencies even further.
Coinbase’s Lobbying Efforts and Stock Recommendation
In recent years, Coinbase has significantly increased its lobbying efforts in the U.S. with the goal of promoting clearer and more crypto-friendly regulations. However, Berenberg analysts maintain their “hold” recommendation on Coinbase stock and a price target of $39. They view the stock as uninvestable in the near term due to its substantial increase this year compared to Bitcoin and Nasdaq.
Challenges Faced by Coinbase
Palmer highlights Coinbase’s ongoing case with the U.S. Securities and Exchange Commission as a potential obstacle for positive momentum in its share price. He also acknowledges weaker-than-expected trading volumes during a “persistent crypto winter.” However, Berenberg raised its estimate of Coinbase’s consumer transaction revenue and expects the company to reduce expenses and extend its runway.
Conclusion: A Risky Strategy
While Palmer believes shorting Coinbase shares outright is a risky strategy, he emphasizes the potential for abrupt upside moves as the company navigates its legal battle with the SEC. Despite the challenges and uncertainties, Coinbase’s large cash balance and flexibility provide some cushion for the company.
Hot Take: Coinbase Faces Setbacks in Crypto Lobbying Efforts Following Hamas’ Use of Cryptocurrency
The use of cryptocurrency by Hamas to fund attacks on Israel has had repercussions for Coinbase’s lobbying efforts in the United States. Regulatory actions against Coinbase and political headwinds arising from the Israel-Hamas conflict have led Berenberg Capital Markets to adopt a cautious stance on the company. Additionally, Israeli authorities shut down and seized numerous accounts on crypto exchanges that were being used by Hamas for fundraising. Despite these setbacks, Coinbase continues to advocate for clearer regulations in the crypto industry. However, challenges such as its ongoing case with the SEC and weaker trading volumes pose obstacles for positive momentum in Coinbase’s share price.
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