Coinbase Wins Citi Upgrade on Crypto Regulatory Optimism

(Bloomberg) — Coinbase Global Inc. shares have risen this year, and the potential for continued gains has led Citigroup to upgrade the stock.

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Cryptocurrency trading platform Citi upgraded the cryptocurrency trading platform from neutral to buy in a note on Tuesday. Analyst Peter Christiansen said the possibility of a more favorable regulatory environment for the digital asset sector, and Coinbase in particular, has changed his view on the company.

“Changes in the U.S. Election landscape and the Supreme Court’s overturning of a long-standing Chevron precedent have changed our view of Coinbase’s regulatory risks,” Christiansen wrote. “We estimate that the upside opportunity resulting from a more favorable regulatory environment is too large to ignore.”

Coinbase shares have surged 48% this year, giving it more than $21 billion in market value and have risen alongside other crypto-related companies as Bitcoin has risen.

Last year, the U.S. Securities and Exchange Commission sued Coinbase, alleging violations of securities rules. Christiansen argues that the Supreme Court’s recent overturning of a legal doctrine known as Chevron, which gives federal regulators the authority to interpret vague laws, could give the crypto trading platform additional flexibility in its defense.

The analyst also said that the upcoming US election results are shifting more positively towards the crypto industry. President Joe Biden’s tenure has led “many to conclude that the potential for pro-crypto legislation would fare better under a different administration,” while noting that former president Donald Trump is expected to speak at an upcoming Bitcoin conference.

Citi’s upgrade took the consensus recommendation among analysts tracked by Bloomberg to the most positive level in nearly two years. Meanwhile, analysts’ target prices suggest a slight 1.5% decline in the stock’s expected return potential, or stock price performance, over the next 12 months.

In contrast, Christiansen’s new price target of $345 suggests the stock could rise by about a third.

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