COIN Could Rise as US House Set to Vote on FIT21 

Key Takeaways

• The FIT21 bill aims to establish a clear regulatory framework that reduces legal uncertainties for exchanges.
• Despite recent volatility, Coinbase’s stock has shown signs of recovery.
• COIN stock could benefit from the potential dismissal of current SEC litigation.

The US crypto industry has been dealing with a lack of regulatory clarity, struggling to balance innovation while protecting consumers. 

The Financial Innovation and Technology for the 21st Century Act (H.R. 4763), known as the FIT21 bill, aims to establish a comprehensive regulatory framework for digital assets and is set for a crucial vote. If the FIT21 bill is passed, it could benefit Nasdaq-listed Coinbaseby reducing legal uncertainties and compliance costs.

Bill to Bring Regulatory Clarity 

The FIT21 bill seeks to establish a clear regulatory framework for digital assets by distinguishing between those regulated by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). This clarity could help reduce legal uncertainties and compliance costs for digital asset exchanges like Coinbase.

Consequently, COIN could benefit significantly if the bill passes in the coming weeks. However, the bill alone may not ensure an upward trajectory for the stock amid a volatile and competitive crypto market.

On May 16, COIN stock took almost a double-digit hit on reports of the Chicago Mercantile Exchange (CME) planning to offer spot bitcoin trading.

The bill provides provisions for consumer protection, with measures like segregation of customer funds, disclosure requirements, and lock-up periods for token insiders. This can potentially increase user confidence and participation on platforms like Coinbase.

In a bid to provide a safer online environment, Coinbase, along with major tech companies like Match Group and Meta recently  launched  the “Tech Against Scams” coalition to safeguard users from online fraud. 

Meanwhile, Coinbase has also been supporting the FIT21 bill and wagering for better crypto policy in the US. 

The FIT21 bill sets specific criteria for defining a blockchain as decentralized, helping to resolve the ‘securities debate raised by the SEC. By meeting these standards, projects can avoid being classified as securities, reducing the regulatory burden on Coinbase and other exchanges.

Additionally, the bill outlines registration and operational requirements for digital asset intermediaries, including exchanges, brokers, and dealers. Compliance with these regulations could attract more institutional investors who require regulated environments.

FIT21 also outlines registration and operational requirements for digital asset intermediaries, including exchanges, brokers, and dealers. 

By complying with these regulations, Coinbase can ensure it operates within legal boundaries, potentially attracting more institutional investors who require regulated environments.

COIN Price Reactions

The COIN stock price experienced some fluctuations over the past few days. On May 15, the stock opened lower but began a gradual ascent. By May 16, it saw an upward trend, reaching a peak, followed by a decline on May 17. 

Despite almost a 10% drop, the stock recovered, showing a steady increase from May 18 onwards. By May 20, COIN has gained around 15% over five days. In pre-market trading on May 21, it continued its upward trajectory, reaching above $232 an increase indicating recovery from the earlier disruption.

With a clear regulatory framework, Coinbase can explore or avoid new markets and products with greater confidence. For instance, it is now clear that the SEC will not allow Ethereum staking, preventing exchanges from jumping into the offering.

Seems like the SEC will *not* allow $ETH  staking.

Believe it or not, I think this is actually bullish for ETH.

One of the main risks for ETH is the high concentration of its supply staked on Lido, Coinbase, and others.

Now, most institutional demand will be for plain ETH,… https://t.co/eJKEocLIeq 

— jfab.eth (@josefabregab) May 21, 2024 

Quinn Thompson, the CIO of Lekkar Capital, suggests  regulatory shifts are highly favorable for Coinbase. He believes that the SEC’s change in stance could ease or dismiss current litigation against Coinbase, while a forthcoming stablecoin bill and the anticipated Circle IPO position Coinbase to benefit. 

He also notes that increased retail trading activity, bolstered by regulatory approval, enhances Coinbase’s profitability, and the SEC’s acceptance of an ETH ETF improves its staking business outlook. 

Additionally, the resignation of the FDIC chair may pave the way for Coinbase to enter the banking sector, competing with major Wall Street firms, according to Thompson. 

Overall, these developments are poised to boost COIN’s stock price on the back of positive business prospects.

Coinbase Exchange is currently ranked fourth globally by trust score on CoinGecko . It has a 24-hour trading volume of over $5.5b and attracts approximately 46.3, monthly visits at the time of writing.

Coinbase as the Biggest US Exchange

Coinbase, as the leading US crypto exchange, stands to benefit significantly from increased user confidence and trading volume. 

With the potential passage of the FIT21 bill, Coinbase could see reduced legal uncertainties and compliance costs, fostering a more stable and innovative environment. 

These regulatory advancements, coupled with initiatives like the ‘Tech Against Scams’ coalition, position Coinbase to capitalize on new opportunities and enhance its market presence.

About the Author

Shraddha Sharma

Shraddha has around five years of experience as a financial journalist, focusing largely on the Asian markets. Starting her career in Mumbai, India, as a news trainee and producer, she quickly found her niche in crypto. She is keen on learning how emerging technologies affect the broader markets and enjoys explaining complex financial ideas in a way that's easy to understand.

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