• Coinbase has received a Wells Notice from the SEC, which often implies future charges.
• Analysts at Key Banc say that US regulatory action against the crypto space is likely to continue and Coinbase won’t be the only company affected.
• Shares in Coinbase fell by more than 16 percent following news of the notice.
Coinbase Receives Wells Notice from SEC
Coinbase recently received a Wells Notice sent by the U.S Securities and Exchange Commission (SEC), which usually implies that legal action may follow in the near future. The agency has made its stance on digital asset securities clear in recent years, leading analysts to assume that Coinbase may have violated certain laws.
Impact of Regulatory Action
Analysts at Key Banc have commented that if regulatory action against crypto continues, Coinbase will not be the only company to suffer. They also noted that recent strength in Bitcoin could become “the victim of its success” due to unfavorable regulation. Following news of the notice, shares in Coinbase fell by more than 16 percent.
Supreme Court Lawsuit
It should also be noted that Coinbase is currently facing a lawsuit examined by the U.S Supreme Court, though this article does not discuss it further due to it being unrelated to the SEC’s Wells Notice.
Unclear Detail from SEC
Key Banc analysts were unable to confidently assess potential impacts based on lack of detail provided by the SEC regarding any charges or enforcement actions connected with the Wells Notice as of March 22, 2023.
Downgrade From Outperform to Perform
As a result of these events, Key Banc downgraded their rating for COIN shares from outperform to perform due to concerns about fairness in regulation and limited support from banking systems in America for growth within blockchain ecosystems.