Berenberg Capital Markets warns that Coinbase Earn may be considered a security.
Berenberg Capital Markets, an international private and investment bank, shared a report noting that Coinbase's recent announcement of a staking suspension in four states is a stark reminder of the persistent regulatory threats faced by the crypto exchange.
The crypto exchange platform declared that its retail customers in four US states would be banned from incorporating new assets into its staking product due to ongoing legal disputes.
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This move was a result of enforcement actions initiated by ten US states, including Alabama, California, and New Jersey, to stop Coinbase's staking activities within their territories. It is worth noting that US states started their enforcement actions against Coinbase after SEC filed a lawsuit against the firm.
Berenberg's analysts see this as a red flag highlighting the forgotten regulatory challenges revolving around Coinbase, which became particularly important after a divided verdict in the SEC's case against Ripple Labs.
We believe this news served as a reminder to investors who may have viewed COIN’s risk profile as significantly improved after last week’s court ruling on Ripple Labs and the XRP cryptocurrency that the company’s challenges on the U.S. regulatory front remain significant while appearing far from being resolved.
They further expressed concern over Coinbase Earn, an offering that provides staking rewards to retail customers. The analysts pointed out that this product seems at risk of being categorized as a security within the judge’s ruling context.
Coinbase's stock rallied over 20% last Thursday, accompanying the general crypto market uplift following a court ruling that Ripple Labs' XRP sales on crypto exchanges did not violate security laws. At the time of writing, Coinbase stock retails for $104.60.
Coinbase's recent staking suspension has unearthed potential regulatory pitfalls, indicating a turbulent regulatory landscape that may be far from resolution.
