Hamas' Cryptocurrency use may Hamper Coinbase's US Lobbying Efforts, Berenberg Reports
Summary:
Hamas' utilization of cryptocurrency to fund attacks on Israel might have hindered Coinbase's crypto lobbying initiatives in the U.S, as per Berenberg Capital Markets. The firm's analysts retain a cautious stance towards Coinbase, citing several potential pitfalls for its future growth. Also indicated is that Coinbase's ongoing litigation with the U.S. Securities and Exchange Commission could further obscure the now uncertain legal status of cryptocurrency. Despite anticipated obstacles, Berenberg maintains a neutral view on Coinbase stocks and has raised its estimate of the firm's consumer transaction revenue.
Hamas militants' use of cryptocurrency to finance recent strikes on Israel might have impeded Coinbase's crypto advocacy initiatives in America, according to a fresh investment analysis by Berenberg Capital Markets. Berenberg's principal analyst, Mark Palmer, noted on October 18 that his "careful approach" to Coinbase is largely influenced by the numerous regulatory measures imposed against it in the U.S., as well as the political turbulence related to the Israel-Hamas conflict.
Berenberg experts have identified several potential pitfalls for Coinbase's future growth. Last week, The Financial Times revealed that over 100 accounts on Binance and other cryptocurrency exchanges, which were helping Hamas fundraise, had been frozen and impounded by Israeli officials. The Israeli crackdown led to the seizure of cryptocurrency worth millions of dollars.
Despite Hamas's claim in April that it would cease using cryptocurrency for fundraising due to tracking by the authorities on blockchain records, Palmer suggests that the recent news could cause further confusion about the legal status of cryptocurrency. Coinbase has significantly escalated its lobbying efforts in the U.S. in recent years to advocate for more specific and crypto-friendly laws. Berenberg researchers upheld their neutral view on Coinbase (COIN) stocks, sustaining a price target of $39. At the time this report was published, Coinbase stocks were trading at $77.30, a 3% increase for the day, as shown by TradingView data.
It's reported that, "We still regard COIN warily, particularly given that its stock has grown by more than 112% this year in contrast to Bitcoin's ~72% and the tech-centric Nasdaq's ~29%", according to Palmer. Palmer also stated that their neutral stance on COIN resulted from their belief that the stock is not a feasible investment in the immediate future. He pointed to Coinbase's ongoing dispute with the U.S. Securities and Exchange Commission as a potential hindrance to any positive dynamic in the firm's share price.
Despite noting weaker than anticipated trading volumes due to a prolonged cryptocurrency downturn, Palmer reported that Berenberg had elevated its estimate of the firm's consumer transaction revenue from $210 million to $240.8 million. This revision was prompted by his belief that Coinbase's consumer take rate will shrink more slowly than previously estimated.
Coinbase's substantial cash reserves offer a sense of security and adaptability, according to Palmer, who anticipates ongoing efforts from management to curb costs and prolong their operational timeline further. The analyst cites Coinbase's position as a popular short pick and its ample cash reserves as reasons why shorting the company directly is a risky move, especially with potential sudden increases in the stock's value as Coinbase navigates its legal showdown with the SEC.
Published At
10/18/2023 3:45:53 AM
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