Cathie Wood very positive on Coinbase after Ripple court ruling

July 18, 2023 Coin Telegraph

The Ark Invest CEO said the recent Ripple court ruling is a major win for crypto exchanges.

Cathie Wood, the founder and CEO of ARK Investment Management, said she remains bullish over Coinbase in light of Ripple’s partial victory over the Securities and Exchange Commission on July 13.

While Wood noted the ruling wasn’t in outright favor of Ripple, she lauded the outcome as “by and large, very positive for [crypto] exchanges.”

Wood joins the ranks of crypto industry pundits who have made similar points, arguing that the ruling — which found that XRP (XRP) tokens sold to retail investors on crypto exchanges were not securities — could set a positive precedent for Coinbase and Binance in their respective legal battles with the regulator.

Wood explained that despite the crypto exchange receiving a Wells Notice in March and being hammered by a lawsuit from the SEC in June, the share price never fell to new lows, suggesting a robustness in the value of Coinbase stock.

On July 17, three of Wood's Ark Investment exchange-traded funds (ETFs) cashed in on the crypto exchange's recent rally, selling a total of 248,838 shares, worth $26.3 million at the time. These sales came six days after the Ark Innovation ETF sold an additional $12 million worth of Coinbase stock on July 11.

*Coinbase share price year-to-date. Source: TradingView*

Coinbase began 2023 trading at just $33.60 a share. At the time of publication shares of COIN have surged more than 184% since then to reach a price of $105.55 according to data from TradingView.

While many industry players are turning increasingly bullish on Coinbase, analysts from investment firm Berenberg Capital Markets warned that many aspects of regulation for crypto exchanges are far from being resolved.

In a July 17 investment note seen by Cointelegraph lead analyst Mark Palmer said that Coinbase Earn — a financial product that offers yield on crypto staking — appears “particularly vulnerable” to being defined as a security in light of the comments made by Judge Torres in her ruling on the Ripple case.

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Update (July 18, 3:30am): This article has been updated to include Ark Invest's July 17 sales of Coinbase shares.

Hong Kong govt pressures banking giants to accept crypto clients: Report

June 15, 2023 Coin Telegraph

Coin Telegraph

Hong Kong’s central bank reportedly asked major banks including HSBC, Standard Chartered and Bank of China why they aren’t accepting crypto exchanges as clients.

The Hong Kong Monetary Authority (HKMA), which serves as the region's central bank and regulator, has reportedly put pressure on major banks including HSBC and Standard Chartered to accept crypto exchanges as clients.

According to a June 15 report from the Financial Times, which cited three sources familiar with the matter, the HKMA questioned the UK-based firms as well as the Bank of China in a May meeting — asking the institutions why they weren’t taking on cryptocurrency exchanges as clients.

Less than a month before on April 27, the HKMA issued a circular to banking institutions urging them to pay attention to new market developments and encouraging them to adopt a more ambitious approach to new sectors such as the crypto market.

In the document, Hong Kong’s central bank specifically required the institutions to help crypto firms, which it calls “virtual asset service providers” (VASPs), in gaining access to banking services.

*HKMA circular to major banking institutions. Source: HKMA*

According to a source familiar with the content’s of last month’s meeting, the HKMA “encouraged the banks to not be afraid.” The source added that there is opposition to taking on crypto clients.

“We are seeing some resistance from senior executives at traditional banks,” they said.

Cointelegraph contacted the HKMA, HSBC and Standard Chartered for comment but did not receive an immediate response.

Hong Kong’s pro-crypto pressure comes amid a turbulent regulatory environment for exchanges in the United States.

On June 5, the U.S. Securities and Exchange Commission (SEC) sued Binance for violating domestic securities laws. The next day on June 6, the SEC sued Coinbase on similar allegations.

In a June 12 filing, Binance.US claimed that the SEC's lawsuit was placing significant pressure on its relationships with its banking partners in the U.S. Additionally, Binance Australia was recently forced to shut down all AUD services including withdrawals and deposits after its banking ties were severed by local payments provider Zepto.

Meanwhile, some lawmakers from Hong Kong appear more welcoming of crypto firms.

On June 10, Hong Kong Legislative Council member Johnny Ng expressed his support for embattled crypto firm Coinbase on Twitter and went as far as inviting it to establish operations on more friendly ground.

I hereby offer an invitation to welcome all global virtual asset trading operators including @coinbase to come to HK for application of official trading platforms and further development plans. Please feel free to approach me and I am happy to provide any assistance. pic.twitter.com/bcIi1IjMlc
— Johnny Ng 吴杰庄 (@Johnny_nkc) June 10, 2023

On June 1, Hong Kong enacted a new suite of crypto regulations that allowed for locally-licensed crypto firms to begin operations. From this point onwards, any firm with a valid license can service retail investors, allowing them to trade cryptocurrencies including Bitcoin (BTC) and Ether (ETH).

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Moody’s downgrades Coinbase citing ‘uncertain magnitude’ of SEC charges

June 9, 2023 Coin Telegraph

COIN

Meanwhile, financial services firm Berenberg Capital told Cointelegraph that it viewed Coinbase shares as "uninvestable" in the near term.

Credit ratings agency Moody's has downgraded its rating of Coinbase from “stable” to “negative” following the SEC’s legal action against the crypto exchange for allegedly operating as an unregistered securities broker.

In a June 8 statement, Moody's said the downgrade was due to concerns about the impact of the SEC action on Coinbase’s day-to-day operations.

“The change in outlook to negative from stable reflects the uncertain magnitude of impact the SEC’s charges will have on Coinbase’s business model and cash flows.”

Despite the downgrade, Moody's noted that Coinbase maintains a “strong” liquidity position. The rating agency looked favorably on the company’s $5 billion in cash and equivalents compared to its $3.4 billion in long-term debt.

MOODY'S: COINBASE OUTLOOK TO NEGATIVE FROM STABLE.
— Breaking Market News (@financialjuice) June 8, 2023

The firm added that it expects Coinbase to maintain its “focus on expense management” that has successfully mitigated declines in transaction revenue in the past.

Moodys wasn’t alone in adjusting its outlook on Coinbase. While financial services firm Berenberg Capital reiterated its pre-existing “hold” rating to its clients, it slashed its price target for COIN shares from $55 to $39.

In emailed comments to Cointelegraph, Berenberg research analyst Mark Palmer explained that the reduction in the price target reflects their view that Coinbase could see its already-weak Q2 trading volumes “persist and intensify” as a result of the SEC’s charges, explaining:

"Given the potentially significant impact of the lawsuit's outcome on COIN's U.S. operations, we would expect some investors to reduce their exposure to its platform."

Additionally, Palmer noted the SEC's “desired remedy” would require the complete wind-down of COIN's core business practices, namely its staking services. As such, Palmer advised that investors should hold off on pursuing any investment in Coinbase shares in the short term.

“We view COIN shares as uninvestable in the near term.”

While Palmer says Coinbase is uninvestable, ARK Invest CEO Cathie Wood doesn’t seem too worried. In an interview with Bloomberg, Wood said the increasing regulatory scrutiny of competitor crypto exchange Binance was ultimately a good thing for Coinbase in the long run.

“They're very different.”

Ark Invest CEO Cathie Wood says SEC seems to muddle the allegations against Coinbase and Binance https://t.co/nCvEp4jdfV pic.twitter.com/icbeIuLs1C
— Bloomberg Markets (@markets) June 8, 2023

At the time of publication, Wood’s ARK Invest is the world’s fourth-largest holder of Coinbase shares and it shows no sign of giving up that title anytime soon. On June 7, the investment firm purchased an additional $21.6 million worth of COIN shares.

Coinbase shares have plummeted 15.7% since the beginning of the week, and are currently changings hands for $54.90 apiece, according to data from Google Finance.

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US Chamber of Commerce slams SEC’s ‘haphazard’ regulation efforts

May 12, 2023 Coin Telegraph

chamber of commerce

The largest business organization in the world has thrown its weight behind Coinbase in its fight against the SEC.

The United States Chamber of Commerce has blasted the Securities and Exchange Commission (SEC) for its “haphazard, enforcement-based approach” to regulating the cryptocurrency industry on American soil.

In an amicus brief filed to the U.S. Court of Appeals on May 9, the U.S. Chamber of Commerce threw its full weight behind Coinbase, accusing the SEC of deliberately creating a precarious and uncertain landscape for crypto companies operating in the country.

“The SEC has deliberately muddied the waters by claiming sweeping authority over digital assets while deploying a haphazard, enforcement-based approach,” it wrote.

“This regulatory chaos is by design, not happenstance.”

An “amicus brief” derives its namesake from the Latin term, “friend of the court” and refers to advice or information provided by third parties that aren’t explicitly involved in a specific court case.

Additionally, the Chamber of Commerce pressured the SEC to promptly respond to Coinbases’ April 25 complaint, which seeks to compel the regulator to reply to its “petition for rulemaking” and provide clearer regulatory guidelines for crypto firms operating in the country.

*The Amicus Curiae brief submitted by the Chamber of Commerce. Source:* *Chamber of Commerce*.

The complaint was filed after the crypto exchange received a Wells notice from the SEC in March concerning the exchange’s “potential violation” of U.S. securities law.

It’s worth noting that Coinbase’s complaint isn’t asking the court to force the SEC to adopt new rules for cryptocurrencies. Instead, the exchange is merely requesting that the commission provide a response to its July petition, which it is legally entitled to receive within a “reasonable amount of time.”

Directly addressing this point, the Chamber of Commerce claimed that SEC’s “refusal” to respond to Coinbase or “otherwise engage in any rulemaking” isn’t just harmful, they are in fact, unlawful.

"The SEC’s actions are not just harmful policy; they are unlawful; and the consequences of the SEC’s continued delay are severe for that reason too."

The Chamber of Commerce also called out the financial regulator for failing to provide a clear answer to the question of which, if any, of the roughly 20,000 digital assets currently in existence should be deemed “securities” under Federal Law.

It highlighted that the answer to this question would have “immense implications” for “every person involved” in the emerging, $1 trillion digital-asset economy.

“Remarkably, the Securities and Exchange Commission — despite proclaiming itself the primary regulator of digital assets — has refused to resolve this threshold question.”

The Chamber of Commerce isn’t alone in providing legal support for Coinbase. Paradigm, the crypto investment firm led by Coinbase co-founder Fred Ehrsam petitioned to file another amicus brief in support of the crypto exchange, similarly claiming that the SEC’s actions have “crippled a nascent industry.”

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