Citigroup Upgrades Coinbase Amid Optimistic Regulatory Outlook

COINBASE Global shares have surged this year, prompting Citigroup to upgrade the stock.

The cryptocurrency trading platform was raised to buy from neutral at Citi in a Tuesday (Jul 23) note. Analyst Peter Christiansen highlighted the potential for a more favorable regulatory environment for the digital asset industry, particularly for Coinbase.

“Shifts in the US Election landscape and the Supreme Court’s overturning of the long-standing Chevron precedent has changed our view on Coinbase’s regulatory risks,” Christiansen wrote. “We believe the potential upside from a more supportive regulatory environment is too significant to overlook.” Coinbase shares have jumped by 48 percent this year, adding more than $21 billion in market capitalization, rallying alongside other crypto-linked companies as Bitcoin advanced.

Last year, the US Securities and Exchange Commission sued Coinbase, alleging securities rules violations. Christiansen suggests that the Supreme Court’s recent overturning of the Chevron doctrine, which had allowed federal regulators to interpret unclear laws, could provide Coinbase with additional flexibility in its defense.

Additionally, the analyst noted that the upcoming US election results are becoming more favorable for the crypto industry. President Joe Biden’s tenure had led “many to conclude that potential for pro-crypto legislation would fare better under a different administration,” he wrote, pointing out that former president Donald Trump is expected to speak at an upcoming Bitcoin conference.

Citi’s upgrade has pushed the consensus recommendation from analysts tracked by Bloomberg to the most positive level in about two years. Meanwhile, the expected share-price performance for the stock over the next 12 months, according to analysts’ target prices, suggests a slight decline of 1.5 percent.

In contrast, Christiansen’s new price target of $345 indicates he believes the stock could rally by about one-third.