Coinbase Stock Has Held Up Amid the Regulatory Crackdown on Crypto, Binance – Barron’s

Coinbase Global stock slipped amid declines across digital assets Tuesday, but the shares have still shown some resilience despite continued regulatory pressure on the crypto industry.

While Coinbase (ticker: COIN) stock often moves in step with digital asset prices, shares in the crypto broker had gained as much as 2% on Tuesday, initially holding up amid a broader downturn. The shares, however, fell 0.6% in afternoon trading as Bitcoin also shed 0.6%. The S&P 500 was down 0.5%, in comparison.

Fears gripped the crypto landscape after the Commodity Futures Trading Commission filed a suit against Binance on Monday. The commission alleged that the worlds largest crypto exchange violated rules requiring futures and other derivatives to be traded on regulated platforms. Binance said it was disappointed by the suit and that it would continue to collaborate with regulators in the U.S. and around the world.

Overall, Coinbase stocks resilience, and outperformance, in the face of these pressures is noteworthy. The shares are still up more than 75% so far this year, even though the stock dropped sharply last week after the company disclosed looming SEC charges. Bitcoin is lagging behind Coinbase shares, with the cryptocurrency gaining 64%, according to Dow Jones Market Data. The S&P 500 has only risen 3% in 2023.

But any gains in Coinbase stock arent as simple as investors bidding up the shares because of pressures on a rival.

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Coinbase and Binance are both crypto exchanges, but the former offers mostly straightforward buying and selling of digital assets, largely focusing on U.S. retail investors. Binance is based offshore, and is home to the worlds most liquid Bitcoin futures market, which is the largest market in all of crypto trading.

Pressures on Binance dont necessarily benefit Coinbase. In fact, CFTC scrutiny on Binance only underscores just how much U.S. regulators are cracking down on crypto companies at large. It was only last week that Coinbase said it was expecting charges from the Securities and Exchange Commission. Overall, the pattern of charges spreading to other companies isnt a positive for Coinbase.

The case against Binancewhich focuses on derivativesalso bodes ill for Coinbase, which has been pushing to diversify its business away from core crypto trading operations to include more subscription- and service-based revenue. Part of this diversification has included Coinbase dipping its toes into derivatives.

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However, investors are still upbeat about crypto, with Bitcoin and Coinbase stock alike rallying amid expectations that the Federal Reserve will be more accommodative on monetary policy. Traders are hoping that the era of high interest rates may soon end, which could mark a return to the looser financial conditions that sent Bitcoin on its last bull run in 2020.

And for Coinbase stock, regulatory headwinds generally seem to be falling to the waysideat least for now.

Write to Jack Denton at

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Coinbase Stock Has Held Up Amid the Regulatory Crackdown on Crypto, Binance - Barron's

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