JPMorgan Lowers Full-Year Forecast for Coinbase Stock Amid Regulatory Risks

Investment bank JPMorgan has revised down its full-year projection for Coinbase stock from $60 to $52 due to concerns surrounding regulatory actions.

The bank’s analysts have cited pressure on stablecoin issuers from regulators, a ban on Kraken exchange offering staking services to users, and stricter requirements for digital asset storage providers as the primary reasons for their adjusted forecast.

Of particular concern is Coinbase’s staking business, which the analysts suggest is at risk. The bank notes that the upcoming Shanghai Fork Ethereum blockchain update in March could automatically register all of Coinbase’s customers in staking, generating up to $1 billion in revenue but also increasing regulatory scrutiny.

“We agree that strong rules and regulations are needed to ensure greater confidence and growth in the crypto ecosystem.. However, we see current regulation with heavy enforcement as a risk for digital-focused businesses.. Recent actions by the Securities and Exchange Commission have put various aspects of the business at risk, including staking, stablecoins and asset custody,” – JPMorgan analysts wrote.

In 2022, the value of Coinbase shares dropped by almost 70% due to the decline in digital asset values, falling from $193 to $65 per share.

In recent news, Catherine Wood’s Ark Inves management firm purchased more than 16,000 shares of Coinbase for $6.7 million in mid-February.