Coinbase Faces Regulatory Threats in the U.S., Says Berenberg Capital Markets
According to Berenberg Capital Markets, Coinbase is still facing regulatory challenges in the United States despite its lobbying efforts for clearer guidelines from Congress. In a research note, the firm reiterated its “hold” recommendation on Coinbase stock with a price target of $39. The main concern for Berenberg is not the company’s performance in the coming months but rather the potential threats to its business posed by regulatory actions and litigation.
Hamas’ Use of Cryptocurrency Could Complicate Coinbase’s Efforts
Berenberg analyst Mark Palmer stated that reports of Hamas using cryptocurrency for fundraising ahead of attacks in Israel could complicate Coinbase’s push for more favorable legislation. Last week, Israeli authorities froze cryptocurrency accounts linked to Hamas. While Hamas had previously stated that it would no longer use crypto for fundraising due to authorities being able to track it on blockchain ledgers, these recent headlines may make it even harder to determine the legal status of cryptocurrencies.
Shares Rise Despite Regulatory Concerns
Despite the regulatory challenges, Coinbase shares rose 4.3% on Tuesday. The company has been actively lobbying lawmakers to create a legal framework that would facilitate its operations in the largest crypto market. However, Coinbase is also engaged in a legal battle with the Securities and Exchange Commission (SEC). Palmer noted that this lawsuit will likely impact the share price for some time. While Berenberg raised its estimate of Coinbase’s consumer transaction revenue, they still see risks of compression due to competition within the crypto space.
Hot Take: Uncertainty Surrounding Coinbase’s Regulatory Environment
Coinbase continues to face regulatory uncertainty in the U.S., which poses threats to its business operations. Despite lobbying efforts and rising shares, concerns persist regarding the legal status of cryptocurrencies. The recent reports of Hamas using cryptocurrency for fundraising further complicate Coinbase’s push for more favorable legislation. The company’s ongoing legal battle with the SEC also adds to the uncertainty surrounding its future. While Coinbase has shown growth and resilience in the past year, it remains to be seen how it will navigate the evolving regulatory landscape.
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