Coinbase's ongoing struggle with regulators keeps its stock price under pressure.
Coinbase, an American publicly traded company that operates a cryptocurrency exchange platform, has faced regulatory pressure, directly impacting its stock prices.
The downfall in the company's stock prices, investment bank Citi recently downgraded Coinbase shares from "Buy" to "Neutral," and reduced its price target, pointing to "too many unknowns" amidst the company's conflict with regulatory authorities.
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According to the Seeking Alpha report shared on May 1st, Citi investment analyst Peter Christiansen noted that Coinbase's stock price will remain in a tight spot as long as US regulations stay unclear.
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.
In March, Coinbase received a Wells Notice from the Securities and Exchange Commission (SEC) regarding potential securities law violations.
The crypto exchange responded in April by filing a federal court action, urging the US securities regulator to provide clarity on the regulatory treatment of specific digital assets.
Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal later released a public response to SEC's Wells Notice on YouTube.
Investment analyst Christiansen stated that the debate over Coinbase's regulatory predicament remains unresolved and could unfold in various ways, including:
(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 a challenging legislative calendar and an upcoming election year, and/or even (iii) Ripple’s ongoing legal process, which could be potentially precedent setting.
Christiansen also noted that recent SEC developments don't indicate any imminent resolution between the parties.
At the time of writing, Coinbase's stock is trading at $51.32, down 58.5% over the past year. However, this didn't stop Cathie Wood's ARK Invest from purchasing over $8 million worth of Coinbase shares.
