Regulatory Setback Weighs on Coinbase Shares

Coinbase US19260Q1076

Hopes for swift and definitive cryptocurrency regulation in the United States have been dealt a significant blow, creating fresh uncertainty for the sector. In a surprising move, Coinbase CEO Brian Armstrong withdrew his support for a key legislative proposal, causing an immediate postponement of a scheduled vote in the U.S. Senate. The company's stock reacted negatively to the resurgence of political ambiguity and the open conflict with the traditional banking industry.

The political impasse is leaving a clear mark on Coinbase's share price. Market analysts have already adjusted their outlook in response to the changed circumstances. Piper Sandler reduced its price target for the stock from $350 to $270, while maintaining a "Neutral" rating.

The equity remains highly volatile. With a beta factor of 3.71, the shares demonstrate extreme sensitivity to broader market fluctuations and news-driven sentiment. The stock is currently trading well below its 52-week high of over $360, reflecting persistent investor skepticism.

A Last-Minute Withdrawal of Support

The market was caught off guard by the timing of the decision. Mere hours before a critical committee session, Armstrong stated via social media that Coinbase "could not support" the current draft of the market structure legislation. He cited a reduced role for the Commodity Futures Trading Commission (CFTC) and overly restrictive limits on Stablecoin reward programs as primary reasons.

The political consequences were immediate. Committee Chairman Tim Scott indefinitely delayed the vote, potentially pushing it to February or March. Senator Cynthia Lummis expressed frustration, characterizing the intervention as another setback in a protracted legislative process. Armstrong defended the action, stating that last-minute alterations to the bill's text left his team insufficient time for negotiation.

Upcoming Financial Focus

Investor attention is now shifting to February 12, 2026. After the market closes, Coinbase is scheduled to release its financial results for the fourth quarter and the full year 2025. Expectations are mixed: while analysts anticipate a revenue increase, they forecast a decline in profit of approximately 27.5%. This projected decrease is largely attributed to significant ongoing investments in technology and marketing.

The Core Conflict: Stablecoin Rewards

A fierce battle over market share is raging behind the scenes between the crypto industry and established financial institutions. The central point of contention is whether cryptocurrency exchanges should be permitted to offer customers interest-like rewards for holding Stablecoins.

More than 3,000 banks have voiced opposition to the current version of the bill. Their concern is that such offerings could draw hundreds of billions of dollars in deposits away from the traditional banking system, potentially endangering local lending for mortgages and small businesses. Armstrong, in contrast, is calling for a level competitive playing field. He emphasizes that crypto firms should have the same ability to offer lending services as banks.