This week, Coinbase joined the cryptocurrency rally after a federal judge ruled that Ripple Labs' private XRP token is not a security when sold on an exchange, but is a security when sold to institutional investors. Thursday's trial was only a partial victory for Ripple, but significant for both the company and the broader crypto market. Coinbase shares rose more than 24% on the day of the ruling on optimism that it could prevail in its own battle with the SEC. In June, regulators sued Coinbase, alleging that it was operating as a broker, exchange, and clearinghouse for unregistered securities, naming 13 of those securities. “Ripple is the first case the SEC has lost under its app-based regulation strategy and thus calls into question other actions it has underway, perhaps most notably its case against Coinbase,” said Joseph Vafi. from Canaccord Genuity in a note on Thursday. COIN 5D Coinbase mountain recovers after court ruling in SEC case against Ripple and XRP. and vindication for the company as well", added Vafi. "In our opinion, [the] The decision in the Ripple case helps tip the balance even more towards a favorable outcome for Coinbase.” However, Wall Street is split on how investors should tiptoe around Coinbase from here. Top-rated Wedbush Securities on the stock and raised his price target to $110 on Thursday, from $96, he said he is "specifically encouraged by the suggestion that 'the sale of XRP on public exchanges did not involve securities.'" Needham has a rating of buy on Coinbase and on Friday raised his price target to $120 from $70. His analyst, John Todaro, called this week's ruling a "positive read from Coinbase," which "sets a precedent that crypto token sales through exchanges, at least in the case of XRP, they did not violate securities laws.” is to “moderately remove the risk of regulatory pressure on the stock.” Compass Point and Canaccord Genuity also have Buy ratings on Coinbase. Others are less convinced. Raymond James, who has an underperforming rating on Coinbase, said on Thursday that the decision "may not have the final say on this issue," as the SEC is likely to try to appeal it. Berenberg Capital Markets said that "a close reading of the ruling shows that the judge did not specifically reject" the argument that many tokens sold on secondary exchanges are unregistered securities, concluding that "the scope of [the] the rally in COIN shares was not justified." Berenberg has a hold rating on the shares. Cowen issued a note to investors reminding them that Coinbase's "case is unlikely to be heard until the fall in [the] before" and, even with some clarity on XRP, it remains true that "any altcoin other than BTC is at risk of being considered a security by the SEC." Cowen reiterated his underperforming rating on Coinbase. Barclays analyst Ramsey El-Assal, while leaving his opinion on Coinbase lightly, wrote that he nonetheless viewed "the ruling as increasingly positive for Coinbase, as it sets further legal precedent that, in some cases, a token can not be a value (although it is true that two of the three issues will still go to trial)."
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Coinbase shares surged on Ripple’s partial court victory this week. Why the decision matters for the crypto exchange
