Bernstein, a prominent financial research firm, has significantly increased its price target for Coinbase (COIN), the largest US-based cryptocurrency exchange. Analyst Gautam Chhugani raised the target to $510 from $310, citing the company as "the most misunderstood" in their crypto coverage. This new target represents the highest on Wall Street.
Following the announcement, Coinbase shares saw an approximate 4% increase in early trading sessions.
Key Drivers Behind the Upgrade
Bernstein maintained its "outperform" rating on Coinbase, pointing to several fundamental strengths and favorable regulatory tailwinds.
Regulatory Catalysts: The GENIUS Act
A primary catalyst noted is the potential passage of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act. This proposed legislation aims to create a clear regulatory framework for stablecoins in the United States. As a major player in the stablecoin market, Coinbase is poised to benefit substantially from such regulatory clarity, which would legitimize and potentially expand this significant segment of its business.
Strong Market Position and Unique Attributes
Bernstein highlighted several factors that solidify Coinbase's dominant position:
- Exclusive S&P 500 Status: Coinbase remains the only cryptocurrency-focused company listed in the S&P 500 index, granting it unparalleled visibility and credibility among traditional investors.
- Dominant ETF Custodian: The company serves as the custodian for 8 out of the 11 approved spot bitcoin ETF managers, a critical and recurring revenue stream.
- Leading Stablecoin Operations: It operates one of the most significant stablecoin businesses among global exchanges.
- Strategic Acquisitions: Through its mammoth $2.9 billion acquisition of Deribit in May, Coinbase now owns the world's largest crypto options platform, diversifying its product offerings and revenue sources.
Broader Analyst Consensus
This optimistic outlook is not isolated. Earlier in the week, Benchmark Equity Research reiterated its "buy" rating on Coinbase and raised its price target to $421 from $301.
Benchmark analyst Mark Palmer also emphasized the positive impact of the GENIUS Act. Furthermore, he pointed to another piece of proposed legislation, the CLARITY Act, which seeks to establish a comprehensive regulatory framework for digital assets. Palmer suggested this act could significantly boost Coinbase's staking services.
"The initial version of the bill would establish that staking does not represent a securities offering," Palmer noted. "We would expect this clarification to result in a sizeable increase in the company’s staking volumes as more institutional investors pursue the yield afforded by that offering."
Positive Company Developments
In a separate announcement, Coinbase revealed it had assisted the U.S. Secret Service in recovering $225 million in USDT that was stolen through "pig butchering" scams. The company has begun the process of returning these funds to victims, an action that reinforces its commitment to security and consumer protection.
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Industry-Wide Regulatory Moves
The push for regulatory clarity isn't just benefiting exchanges. Major stablecoin issuers are also seeking formal recognition within the traditional financial system.
- Ripple's Application: Ripple has applied for a national bank charter with the Office of the Comptroller of the Currency (OCC). If approved, its RLUSD stablecoin would be regulated under both federal (OCC) and state (New York Department of Financial Services) oversight. CEO Brad Garlinghouse called this a "new and unique benchmark for trust in the stablecoin market."
- Circle's Application: Similarly, Circle, the firm behind the USDC stablecoin, submitted its own national bank charter application with the OCC.
These moves highlight the ongoing convergence between the traditional finance world and the digital asset economy. Anchorage Digital remains the only crypto-native bank to have already received a national charter from the OCC.
Context: A Thriving Crypto Market
The upgraded outlook for Coinbase comes amid a robust period for the crypto market. Bitcoin has been trading around $109,500, fueling success for related financial products.
BlackRock's iShares Bitcoin Trust (IBIT), for which Coinbase acts as custodian, became the fastest ETF in history to reach $70 billion in assets. Remarkably, Bloomberg calculated that IBIT now generates more annual fee revenue ($187.2 million) for BlackRock than its massive S&P 500 fund (IVV), despite IVV holding nine times the assets, due to IBIT's higher fee structure.
Frequently Asked Questions
What is the new Coinbase price target from Bernstein?
Bernstein analyst Gautam Chhugani raised the price target for Coinbase (COIN) to $510, which is the highest target on Wall Street. The firm maintains an "outperform" rating on the stock.
Why did Bernstein raise the Coinbase price target?
The upgrade was driven by several factors, including the potential positive impact of the proposed GENIUS Act for stablecoin regulation, Coinbase's unique position as the only crypto firm in the S&P 500, its role as custodian for most bitcoin ETFs, and its recent strategic acquisitions.
What is the GENIUS Act and how does it help Coinbase?
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act is proposed legislation to create a federal regulatory framework for stablecoins. As a major player in the stablecoin market, Coinbase would benefit from the clarity and legitimacy this would provide, potentially expanding its business in this area.
What other recent good news has Coinbase announced?
Beyond the analyst upgrades, Coinbase recently acquired token management platform Liquifi to enhance its services for crypto builders. It also announced it helped the U.S. Secret Service recover $225 million in stolen cryptocurrency, bolstering its reputation for security.
How are other companies in the crypto sector seeking regulatory approval?
Major stablecoin issuers like Ripple and Circle are applying for national bank charters from the OCC. This trend signifies a broader movement of crypto companies seeking to operate within the established traditional financial regulatory system to build trust and ensure compliance.
Is the positive outlook for Coinbase shared by other analysts?
Yes, the positive sentiment is shared by other firms. Benchmark Equity Research also recently reiterated its "buy" rating and raised its price target for Coinbase, citing similar regulatory catalysts and the company's strong market position.