Coinbase stock will be ‘weighed down’ until US rules are clear: Citi
Crypto exchange Coinbase’s stock price will continue to be “weighed down” until regulators establish the legal “rules of the road” in the United States, according to investment analysts from Citi.
As per reports on May 1, the investment bank downgraded shares of the crypto exchange from “Buy” to “Neutral” and lowered its price target — citing “too many unknowns” as the company battles it out with regulators.
"Until the regulatory 'rules of the road' are better established in the U.S., the stock will remain weighed down by this high level of uncertainty," Citi analyst Peter Christiansen wrote in a May 1 note.
In March, Coinbase disclosed it had received a Wells notice from the Securities and Exchange Commission (SEC) over possible violations of securities laws — signaling possible future enforcement action.
In April, it shot back at the SEC, filing a federal court action compelling the SEC to give clarity into the regulatory treatment of certain digital assets.
Later in the month, Coinbase CEO Brian Armstrong and Chief Legal Office Paul Grewal released 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, @iampaulgrewal 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
“As it stands, both long and short debates begin and end with Coinbase's regulatory predicament,” said Christiansen, noting there could be a few ways the regulatory scuffle could play out:
“Clarity could come from: (i) a lengthy legal process vs. the SEC, where the possibility of an operating injunction cannot be ruled out, (ii) long-awaited legislative movement amidst
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