Coinbase’s lobbying efforts hit a snag with Hamas’ crypto use: Berenberg analysts

The use of cryptocurrency by Hamas militants to fund recent attacks on Israel has set back Coinbase's crypto lobbying efforts in the US, according to a new investment report from Bernberg Capital Markets.

In an Oct. 18 research note, Bernberg's lead analyst Mark Palmer said the main driver of his “cautionary stance” on Coinbase comes from various regulatory measures being imposed on it in the US and the political headwinds arising from the Israel-Hamas conflict. .

Last week, the Financial Times reported that Israeli authorities had closed and seized more than 100 accounts on Binance and other crypto exchanges to aid Hamas in its fundraising efforts.

As part of the crackdown, Israeli authorities seized millions of dollars worth of cryptocurrency.

“Hamas announced last April that it will no longer use crypto to collect money due to the authorities' ability to monitor the activity on blockchain ledgers, we believe that the latest headlines are likely to clarify the question of the legal status of kriptovalyutnogo, more difficult. ” Palmer wrote.

Over the past few years, Coinbase has significantly increased its lobbying efforts in the United States as part of a strategy to push for more transparent and crypto-friendly regulation in the country.

Berenberg analysts reiterated their “Hold” recommendation on Coinbase (COIN) stock and maintained a $39 price target.

Coinbase shares were trading at $77.30, up 3% on the day, according to data from TradingView at press time.

“Especially after the stock has sold off more than 112% this year with 72% to Bitcoin and ~29% to the tech-heavy Nasdaq, we continue to watch with caution,” Palmer said.

“Our hold rating on COIN reflects our view that investment is not possible in the near term,” he said.

Related: Coinbase Suspends 80 Non-US Dollar Trading Pairs to Improve Liquidity

Palmer added that Coinbase's ongoing case with the US Securities and Exchange Commission may remain “overwhelming” for any positive momentum in the company's stock price.

While Palmer also described weaker-than-expected business volumes from a “permanent crypto winter,” Berneberg said the company raised its estimate of consumer transaction revenue to $240.8 million from $210 million.

This adjustment was made to reflect the assumption that Coinbase's consumer “will contract at a slower pace than we expected.”

Palmer also noted that the crypto exchange's large cash balance gives it “cushion and flexibility,” and he expects management to keep costs down and extend its runway going forward.

“Given these factors, as well as the fact that COIN is crowded short, we believe that shorting the company's shares outright represents a risky strategy, especially as the stock could be exposed to sudden upside moves as the company continues its legal battle with the company. SEC.”

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