Coinbase Expects Case to Pass Soon
Coinbase announced on Feb. 21 that the U.S. Securities and Exchange Commission (SEC) is set to dismiss its case against the cryptocurrency exchange. H.C. Wainwright & Co. analysts call it a “major win” for Coinbase and the entire cryptocurrency sector.
Although ultimate approval by SEC commissioners is still pending, the management of Coinbase is hopeful that the case might be dismissed as soon as next week, analyst Mike Colonnese said.
Allegations and Regulatory Shift
The SEC’s lawsuit, which it filed in June 2023, accused Coinbase of selling unregistered crypto securities and operating illicitly as an exchange, broker, and clearing house. The dismissal of the case would take away a huge regulatory overhang and indicate a change in tone towards a more crypto-friendly direction from the SEC.
Regulatory Overhang Removed, Expansion Imminent
Analysts Mike Colonnese and Dylan Scales pointed out that this action eliminates a significant regulatory risk for Coinbase’s shares. The resolution of the lawsuit is expected to reduce legal costs and open up opportunities for business expansion, particularly in staking and new crypto listings.
We expect the denial of Coinbase’s application to motivate expansion of its staking business, which has been strained since the enforcement action,” the analysts wrote. “This will also be able to accelerate new crypto listings, both to subscription revenues and transaction fees”.
Stock Reaction and Market Impact
Coinbase’s stock rose by 1% on Friday initially following the announcement, but analysts were expecting a more positive reaction. However, sentiment turned as reports of a high-profile hack on Bybit rattled the broader crypto market, with Coinbase’s shares dropping.
Coinbase’s stock closed at $235.37 on Friday, down 8.2% on the day.
