Coinbase shares rise 7% as Grayscale ETF decision takes effect

  • Shares of Coinbase jumped 7% on Tuesday as investors were buoyed by a court ruling in a Bitcoin spot ETF case that could also benefit the crypto exchange.
  • The cryptocurrency company must also submit its final response to the SEC’s response to Coinbase’s dismissal request by the end of Tuesday.
  • Grayscale Bitcoin Trust and MicroStrategy, another crypto-exposed company, posted double-digit gains in Tuesday morning trading.

Brian Armstrong, CEO of Coinbase, blasted the U.S. Securities and Exchange Commission. He also said the cryptocurrency exchange was looking to invest more outside the United States.

Carlos Jasso | Bloomberg | Getty Images

Cryptocurrency Exchange Stocks Coinbase rose about 7% Tuesday afternoon as optimism over the long-awaited approval of the Bitcoin spot ETF boosted the stock. It could be a turning point for the company, which has clashed with the Securities and Exchange Commission in Manhattan federal court.

Actions of Grayscale Bitcoin Trust also jumped nearly 5% Tuesday morning. Grayscale saw a victory formalized in federal appeals court on Monday, when a judge’s mandate asking the SEC to review the company’s Bitcoin ETF proposal went into effect.

Coinbase’s stock price, which was also boosted by this finalized move, often closely mirrors the performance of broader cryptocurrency markets. The company is one of the largest custodians of cryptocurrencies and has been approached by a host of potential ETFs, including The Bitcoin ETF offered by BlackRockin this capacity.

The SEC has faced criticism from both industry and Congressional criticism due to its perceived “regulation by enforcement” approach. Critics claim that the regulator is punitively targeting cryptocurrency exchanges following the collapse of FTX, while its supporters claim that many cryptocurrencies are indeed securities and that additional regulation is not needed to establish the jurisdiction of the SEC.

The fight over jurisdiction has dampened the stock prices of companies exposed to cryptocurrencies; Coinbase is up nearly 119% year to date, but remains well below its pre-crypto winter levels. Microstrategy another company with exposure to cryptocurrencies, saw its shares rise 12% Tuesday morning, but remain similarly down from 2022 levels.

Coinbase is also expected to make a final filing in its appeal petition. The company proposed to dismiss the SEC’s claims in August, arguing in part that the SEC’s lawsuit was both beyond the scope of the SEC’s authority and that the assets in question did not constitute securities under the Howey test. The SEC in turn responded by continue to argue that Coinbase “conducted” “intermediary transactions involving investment contracts.”

Coinbase’s response is expected in federal court by the end of Tuesday.


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