Coinbase is a 'hold' amid 'too much regulatory risk,' says Berenberg

SQuick Take

  • The regulatory environment for crypto presents challenges for Coinbase, according to Berenberg Capital Markets. 
  • The firm initiated coverage of COIN this week with a $55 price target. 

Coinbase's recent regulatory woes make its stock a 'hold,' according to analysts at Berenberg Capital Markets. 

The firm, which initiated coverage in the crypto-linked equity, kicked off its coverage of the stock with a price target of $55 per share. Coinbase closed at around $57.90 a share. Shares are up about 70% year-to-date.

Berenberg's neutral view on the stock stems from the regulatory environment for crypto in recent months and, specifically, rising tensions between Coinbase and the SEC which present "too much regulatory risk."

For its part, Coinbase sued the SEC less than a year after it requested the agency for regulatory clarity. The SEC, in turn, argued that the commission is under no obligation to issue new regulations and Coinbase has no standing to sue the agency.

The battle—and Chairman Gary Gensler's view that most cryptocurrencies are securities—could spell trouble for COIN bulls. 

"Investors should believe the SEC when it says it views all crypto tokens other than bitcoin as unregistered securities," Berenburg's Mark Palmer noted. "As such, all platforms that facilitate trading of those tokens in the U.S. are vulnerable to being hit with enforcement actions that would potentially impact large swaths of their business activities."

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