Regulation
Coinbase (COIN) Shifts From Neutral to Buy on Improving Regulatory Risk: Citi
Cryptocurrency exchange Coinbase (COIN) is likely to benefit from an improving regulatory regime in the United States following the November presidential election and the Supreme Court ruling reversal of the previous ChevronCiti (C) said in a research report on Tuesday, upping the value of the shares.
Citi raised Coinbase to buy from neutral and increased its price target from $260 to $345. Shares were nearly flat in premarket trading, trading around $266 at press time.
The bank said the stock could respond positively to an improvement in the regulatory environment following the US elections and increased confidence in its legal strategy following the reversal of the Chevron deference doctrine.
“Despite the increased turbulence in the upcoming US elections, we believe the risk/reward setup for Coinbase, particularly as it faces its defense against the Securities and Exchange Commission (SEC) causehas improved markedly in recent weeks,” wrote analysts led by Peter Christiansen.
THE launch of spot ether (ETH) Exchange-traded funds (ETFs) in the United States, due out Tuesday, could also be a tailwind. Their introduction suggests the potential for more crypto ETFs to hit the market, greater crypto adoption overall, and a greater opportunity for crypto exchange custody revenue, the report said.
While the stock is already up 52% year-to-date, Citi notes that the upside opportunity from a more favorable regulatory environment may be too big to ignore, “potentially unlocking set-aside institutional capital, investment, and greater collaboration between traditional and crypto-native finance.”
Coinbase could also benefit from a “crypto rally in the U.S.” as more on-chain activity and liquidity develops abroad, the report added.