Coinbase Global (COIN) is one of the first companies people consider when thinking about cryptocurrency. Over the last few years, it has been riding a wave of institutional and retail adoption on the back of its end-to-end trading platform for crypto investors and traders. With a solid performance in 2024, the firm’s remarkable growth story has been solidified by surging trading activity and rising adoption of high-margin services such as staking and custody. Beyond the company’s fundamentals, Coinbase may now be in a prime position to benefit from a seismic shift in the U.S. regulatory landscape.
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Following President Trump’s re-election, policymakers have pivoted towards a friendlier stance on the crypto sector. A recent executive order titled “Strengthening American Leadership in Digital Financial Technology” looks set to establish a clear framework for digital assets and potentially build a national crypto asset reserve. This move could be a game-changer for companies like Coinbase and, in turn, make me a COIN bull.
Growing Crypto Legitimacy Helps COIN
We rarely have a quiet week in the crypto space, but with the sector proving murky and troublesome for many, clear policy initiatives and transparent legislation are a must for investors seeking stability in the industry. Lack of clarity over recent years has likely hindered institutional investment and fostered a gambling mentality among individual investors. I think structured oversight from a supportive regulator could be the right balance, potentially working to Coinbase’s advantage in three key ways.
Firstly, considering the discussions in U.S. Congress regarding clear guidelines on stablecoins and broader crypto markets, I think developing a well-defined regulatory framework may spark institutional confidence, potentially building Coinbase as a trusted and compliant exchange for such large transactions.
Secondly, Coinbase has been grappling with an SEC lawsuit over potentially unregistered security sales for some time now. Still, the recent move by a U.S. District Judge to proceed will bring some hope that a definitive conclusion will be reached rather than sustaining ongoing uncertainty. An appeals court has also ordered the SEC to explain why a Coinbase request for bespoke crypto regulations was denied, suggesting the legal world may be aligning with the company’s objectives in some ways, too.
Last but not least, the trend of seeing the SEC approving various Bitcoin and Solana ETFs gives institutional investors confidence that the crypto market is on its way to being safe, secure, and legitimate. With Coinbase already well-established in the burgeoning crypto market, trading volumes will likely grow, and custody service fees will increase over time.
COIN’s Business Performance Shines
In its most recent figures, Coinbase impressed with resilience and genuine success in a challenging and unpredictable environment. While Bitcoin and the broader market surged, management expanded quarterly revenues by 172% to $2.3 billion. The fast-growing services segment also saw a 15% increase to $641 million, with Coinbase One, COIN’s premium subscription service, showing strong uptake.
As the largest regulated exchange in the country, Coinbase remains the go-to platform for many U.S. institutions looking to tap into crypto. While competition in the crypto space is mushrooming, COIN’s first-mover advantage should buy the company enough time to build up its client infrastructure and establish itself as the preferred gateway into all digital assets for companies and individuals alike.
However, with any crypto investment, risks are ever-present. One notable issue is the rise of decentralized exchanges such as Binance. These exchanges offer lower fees and more independence, which can appeal to investors wary of regulatory or government intervention in cryptocurrency assets. If these companies were to gain further popularity, it could seriously hamper Coinbase’s user base.
Is Coinbase a Buy, Hold, or Sell?
On Wall Street, COIN stock carries a Moderate Buy consensus rating based on ten Buy, eleven Hold, and zero Sell ratings over the past three months. COIN’s average price target of $350.47 per share implies a hefty 49% upside potential over the next twelve months.
A Promising COIN Future Amid Crypto Volatility
The past year has highlighted why investors are excited about cryptocurrency and Coinbase stock. With the U.S. government gradually establishing a clearer regulatory framework, there’s potential for further growth. If Coinbase’s management continues to build user trust and strengthen its position as a leading cryptocurrency platform, the company could have a highly successful future.
With the crypto market quickly moving from an unregulated entity full of suspicion to a regulated one winning over critics by the day, COIN could be a superb addition to investor portfolios, given the legitimized crypto exposure the stock provides. If investors seek out crypto exposure, it’s only worth doing so via companies already montetizing this novel investment class.
