Coinbase falls after US SEC threatens to sue over some crypto products
Adds comment, graphics, background; Updates shares to market open
By Manya Saini
March 23 (Reuters) -Shares of Coinbase Global Inc COIN.O fell 15% in afternoon trading onThursday after the U.S. Securities and Exchange Commission threatened to sue the crypto exchange over certain products.
Global regulators are keeping a close watch on the crypto world after a string of high-profile collapses wiped out more than a trillion dollars from the digital assets industry's market capitalization last year.
"This news illustrates the regulatory headwinds and uncertainty facing the crypto industry in the U.S.under the current administration," said analysts at BofA Global Research.
Brokerage KBW's analysts said in a note that theSEC serving Coinbasewith a Wells notice was expected, andthat the move will likely create an overhang on the crypto exchange's stock.
The company's shares were battered last year in a sector-wide rout, losing about 86% of their value.
The potential enforcementaction by the SEC islikely to be tied to aspects of Coinbase's spot market as well as its staking service Earn, Prime and Wallet products, the company said.
Staking is a process in which cryptocurrency holders volunteer to take part in validating transactions on the blockchain. These products often offer customers eye-popping yields.
"We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so," Coinbase said.
Meanwhile, analysts at TD Cowen said the only way to get clarity on how the law applies to crypto solutions is through litigation.
Last month, Coinbaseswung to a fourth-quarter loss as trading volumes at the crypto exchange came under pressure from an industry-wide downturn. Itslashed 20% of its workforce, or about 950 jobs, as part of a restructuring plan earlier this year.
Bitcoin prices tumble as crypto market shocks weigh Bitcoin prices tumble as crypto market shocks weighhttps://tmsnrt.rs/3K15Lv7
Coinbase shares log broad declines amid industry-wide downturnhttps://tmsnrt.rs/42xke8S
Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli and Devika Syamnath
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