Regulation
Coinbase (COIN) upgrades from neutral to buy on improving regulatory risk: Citi
Cryptocurrency exchange Coinbase (COIN) is set to benefit from an improved regulatory regime in the United States following the November presidential election and the Supreme Court ruling. reversal of the Chevron precedentCiti (C) said in a research report upgrading the stock on Tuesday.
Citi raised its recommendation on Coinbase from neutral to buy and raised its price target to $345 from $260. Shares were little changed before the market opened, trading around $266 at press time.
The bank said the stock could react positively to the improved regulatory environment resulting from the US Elections and increased confidence in its legal strategy following the reversal of the Chevron deference doctrine.
“Despite the increased turbulence surrounding the upcoming US elections, we believe that Coinbase’s risk/reward ratio, particularly with respect to its defense against the Securities and Exchange Commission (SEC), trial“has improved markedly in recent weeks,” wrote analysts led by Peter Christiansen.
THE launch point ether (ETH) Exchange-traded funds (ETFs) in the US could also be a supporting factor. Their introduction suggests the potential for more crypto ETFs to come to market, increased adoption of cryptocurrencies in general, and a larger custody revenue opportunity for the crypto exchange, the report said.
Although the stock is already up 52% year-to-date, Citi notes that the upside opportunity presented by a more favorable regulatory environment may be too great to ignore, “potentially unlocking sidelined institutional capital, investment, and increased collaboration between crypto-natives and traditional finance.”
Coinbase could also benefit from “U.S. crypto catch-up” from higher on-chain activity and liquidity that has developed overseas, the report added.