HomeFinanceBerenberg Funding Agency Analyst Sees MicroStrategy as Safer Wager than Coinbase Because...

Berenberg Funding Agency Analyst Sees MicroStrategy as Safer Wager than Coinbase Because of SEC Threat

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An analyst at Berenberg funding agency believes MicroStrategy is now a safer wager in comparison with Coinbase because of the alternate’s regulatory points. 

Mark Palmer, an fairness analysis analyst at Berenberg Capital Markets, said the US Securities and Trade Fee will probably file an enforcement motion in opposition to Coinbase because the fee will increase its scrutiny of the crypto sector. 

“Given the heightened uncertainty that Coinbase faces, we believe investors would be much better served investing in shares of MicroStrategy,” the analyst reportedly wrote.

Shares of MicroStrategy, a software program maker higher recognized for being the biggest public holder of Bitcoin, have elevated greater than 90% YTD, in comparison with a 63% enhance in Coinbase’s shares over the identical interval. 

The robust efficiency comes on the again of Bitcoin’s rebound in latest months. The flagship cryptocurrency has gained greater than 60% YTD.

In keeping with Palmer, MicroStrategy is an “attractive alternative” to Coinbase given the regulatory pressures on the latter. 

The analyst additionally famous that the SEC has recognized Bitcoin as a commodity whereas claiming that almost all of different crypto belongings are securities. This makes MicroStrategy, which is a significant holder of Bitcoin, an interesting alternative for traders. 

“The SEC has characterized bitcoin as a commodity while asserting that most (if not all) other crypto tokens are unregistered securities, putting bitcoin and MSTR in advantaged positions amidst the regulatory onslaught.”

Palmer said the enforcement actions against crypto exchanges Kraken and Bittrex, as well as crypto lending platform Nexo, could be a preview of the SEC’s approach to Coinbase.

“We believe investors should be focusing on whether the company would have the ability to successfully pivot its business model and geographic focus if it were forced to curtail or cease a large portion of its activities in the US.”

SEC-Coinbase Relationship Continues to Deteriorate

The SEC has been in a legal battle with Coinbase as of late.

Back in March, the commission sent a “Wells notice” to Coinbase, threatening the crypto alternate with authorized actions concerning a few of its listed digital belongings, its staking service Coinbase Earn, Coinbase Prime, and Coinbase Pockets. 

In response, Coinbase CEO Brian Armstrong accused the company of participating in “some really sketchy behavior.”

The alternate additionally filed a lawsuit with a federal appellate courtroom in Philadelphia final month, alleging that “the SEC refuses to address Coinbase’s rulemaking petition” even because the company goals to provoke enforcement actions in opposition to the agency for itemizing unregistered securities.

Nevertheless, the fee has asked a judge to reject Coinbase’s request to compel the fee to reply to the rule-making petition. 

It’s price noting that Armstrong has urged that the alternate might go away the US if regulators do not make clear their strategy to the digital asset area. 

“Anything is on the table, including relocating or whatever is necessary,” he said through the Innovate Finance International Summit final month.


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