Coinbase is delisting some stablecoins in Europe this year. Here’s what it could mean for the crypto stock
Coinbase’s move to delist some stablecoins this year could help the company’s bottom line, according to one analyst. The crypto exchange operator said Friday it will delist stablecoins in Europe that are not compliant with requirements of the Markets in Crypto-Assets regulation, the celebrated European Union crypto law that will fully take effect Dec. 30. “As the industry leader in trusted, compliant crypto products and services, we always aim to achieve regulatory compliance and will continue the same with respect to MiCA,” a Coinbase spokesperson said in a statement shared with CNBC. “We will share further details of our plan in November, and will provide options for affected [European Economic Area] customers to switch to stablecoins issued by appropriately authorised issuers, such as [USD Coin] and [EUR Coin].” That will no doubt pose challenges to Tether (USDT) . The stablecoin leader has been heavily scrutinized over the years for its lack of transparency and alleged use by criminals. Nevertheless, it remains the most popular and most easily accessible stablecoin due to its ubiquity across global exchanges for the past decade. Circle-issued USD Coin (USDC) did not hit the market until 2018. With this delisting, it is likely market makers and traders will swap their Tether for USD Coin, according to Owen Lau, an analyst at Oppenheimer. That could be a boon to Coinbase. “Coinbase and Circle have a revenue sharing agreement — they share 50% of USDC revenue,” he said. “If the market cap for USDC goes up revenue for Coinbase will increase as well.” COIN YTD mountain Coinbase is negative for the year Oppenheimer has a buy rating on Coinbase and a price target of $282, which is 65% above Friday’s close. Although the stock is up 118% in the past year, it is down 1% in 2024 and may have more of a downtrend ahead of it with the crypto market struggling for momentum and a stagnant bitcoin price. “The MiCA implementation is a positive for Coinbase — no doubt about that,” Lau added. “The near-term challenges are still the uncertainty with the election and geopolitical tension so expect near-term vulnerability. But after January 1, 2025, [MiCA will be a good key catalyst for Coinbase — it should help the market cap of USDC, hence, the revenue of Coinbase.” Stablecoins, cryptocurrencies that promise a fixed value peg to another asset, are widely seen as crypto’s killer app. They are largely used for trading on centralized and decentralized exchanges and as collateral in decentralized finance, or DeFi. Their issuers are collectively the 18th largest holder of U.S. treasuries along with large sovereign holders. The market cap for dollar-backed stablecoins has been hitting all-time-highs in recent weeks after a sharp drop in 2023. Tether makes up more than 70% of the market cap of U.S. dollar-backed stablecoins, according to CryptoQuant. USD Coin follows by about 21%.
