Oppenheimer’s Owen Lau pulled his outperform rating on Coinbase (COIN), downgrading to perform after the crypto exchange last night disclosed the receipt of a Wells notice from the U.S. Securities and Exchange Commission (SEC). Also noted by Lau was Tuesday’s Economic Report of the President, which was highly critical of the digital asset industry.
COIN shares are lower by 12.9% in premarket action.
Given the unhealthy regulatory environment, Lau – otherwise supportive of blockchain technology and digital asset development in the U.S. – said he is becoming increasingly concerned about the “fairness of the enforcement actions, and the ability for the [crypto] ecosystem to grow with seemingly limited and shrinking support from the banking system.”
With Coinbase stock up about 118% year-to-date versus a gain of around 3% for the S&P 500 stock index, Oppenheimer’s Lau said he is moving to the sidelines.
“Recent strength in bitcoin (BTC) indicates that people have called for alternative financial systems, but it could also become the victim of its success,” Lau added.
