The share price of cryptocurrency exchange Coinbase will remain "underweight" until regulators establish legal "rules of the road" in the United States, according to Citi investment analysts.
according to reports On May 1, the investment bank downgraded the crypto exchange's shares from "Buy" to "Neutral" and lowered its price target, citing "too many unknowns" as the firm grapples with regulators.
"Until the regulatory 'rules of the road' are better established in the US, stocks will continue to be plagued by this high level of uncertainty," Citi analyst Peter Christiansen wrote in a May 1 note.
In March, Coinbase revealed that there was received a notice from Wells from the Securities and Exchange Commission (SEC) about possible violations of securities laws, indicating possible future enforcement action.
In April, he responded to the SEC, filing a federal court action. forcing the SEC to provide clarity on the regulatory treatment of certain digital assets.
Later in the month, the CEO of Coinbase brayan armstrong and Head of Law Office Paul Grewal launched a public response to the March Wells notice on YouTube.
1/ Today we share our "Wells Response" to the SEC. As part of our response, @iampaulgrewal and I sat down to explain why we trust the facts and the law, and why a Wells notice is not in America's best interest. https://t.co/zkNaWGgtcK
—Brian Armstrong️ (@brian_armstrong) April 27, 2023
“As it stands, both the long and short debates begin and end with the Coinbase regulatory situation,” Christiansen said, noting that there could be a few ways the regulatory fight could play out:
“Clarity could come from: (i) a lengthy legal process against the SEC, where the possibility of an operative injunction cannot be ruled out, (ii) a long-awaited legislative move amid a challenging legislative calendar and next year election, and/or even (iii) Ripple's ongoing legal process, which could potentially be precedent-setting,” the analyst wrote.
The analyst noted that the latest developments from the SEC do not suggest that the parties are close to a resolution.
Related: Coinbase Plans To Set Up A Cryptocurrency Trading Platform Outside The US: Report
At the time of writing this article, Coinbase is trade at $51.32, down 58.5% from last year, according to Yahoo Finance.
Its share price fell about 16% on March 22 after it disclosed that it received Wells' notice.
The company has recently become the target of two proposed class action lawsuits, one alleging that it violated Illinois privacy laws over the collection of biometric data from its customers, and the other alleging that certain executives benefited from inside information when the company went public.
Magazine: Crypto Regulation: Does SEC Chairman Gary Gensler Have the Final Say?
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Henderson County to put stop to cryptocurrency mining
