Why Coinbase Shares Have Dropped 10% This Week


Coinbase is the subject of an investigation by the Securities and Exchange Commission.

After dealing with regulatory concerns that prompted adverse sentiment, shares of the major cryptocurrency exchange Coinbase (NASDAQ:COIN) traded nearly 12% lower after market close on Thursday. This brought the weekly loss for Coinbase to more than 10%.

The SEC Is Investigating Coinbase’s Crypto Listings

It was revealed earlier this week that the Securities and Exchange Commission (SEC) is conducting an investigation against Coinbase for allegedly allowing users on its platform to trade cryptocurrencies that are not yet registered with the SEC. 

Whether or not cryptocurrencies ought to be categorized as securities and, consequently, subject to regulation by the SEC has been hotly contested for a long time. Some people believe that cryptocurrencies should be controlled in the same way that traditional currencies are regulated. They should be treated as commodities and governed by the Commodity Futures Trading Commission.

Paul Grewal, the chief legal officer of Coinbase, stated on Twitter, “I’m happy to say it again and again: We are confident that our rigorous diligence process — a process the SEC has already reviewed — keeps securities off our platform.” 

Cathie Wood, a longstanding bull on Coinbase, along with other exchange-traded funds under her firm ARK Invest, liquidated around 1.4 million shares of Coinbase after hearing the news that the SEC was conducting an investigation.

What’s Next for Coinbase?

Coinbase’s share price has dropped by more than 75% this year and by over 81% since the company went public. The crypto winter has been bad for the company, as it has resulted in a wider cryptocurrency sell-off and a lower amount of cryptocurrency trading. In addition, the company has seen its trading fees decrease.

Coinbase is a stock that has the potential to recover when the cryptocurrency market does, which may potentially take some time. The company needs to continue diversifying its sources of revenue.

If you feel that cryptocurrencies are here to stay for the long haul and that more people will trade them in ten years than now, Coinbase might be a great stock to hold.

Featured Image: Megapixl @Piter2121

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.