Investors were reminded of Coinbase’s (COIN) significant regulatory challenges after Friday’s market close, investment bank Berenberg said in a research report Monday, when the crypto exchange disclosed it had suspended retail staking services in four of the 10 states that say its staking offerings represent securities.
The U.S. District Court ruled that Ripple’s XRP token is not a security in and of itself last week, but also ruled that XRP can be classified as a security when used in certain transactions. Berenberg noted that Coinbase Earn, the securitized product through which COIN offers staking rewards to retail customers, appears particularly vulnerable to being defined as a security within this context.
The SEC’s lawsuit against Coinbase was discussed last Thursday during the first pre-motion hearing, and the commission’s arguments could gain support if any or all of the 10 states that initiated proceedings against COIN for operating an illegal staking program affirm that the program facilitates securities offerings.
Berenberg has a hold rating on Coinbase shares with a $39 price target. The stock closed at $105.55 on Monday.