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Coinbase shares surge 14% as Grayscale ETF ruling takes effect

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Brian Armstrong, CEO of Coinbase, slammed the U.S. Securities and Exchange Commission. He also said the cryptocurrency exchange is looking to invest more outside of the U.S.
Carlos Jasso | Bloomberg | Getty Images

Shares of cryptocurrency exchange Coinbase

Shares of Grayscale’s Bitcoin Trust

Coinbase’s stock price, which was also lifted by that finalized decision, often closely mirrors broader cryptocurrency markets in performance. The company is one of the largest crypto custodians and has been tapped by a host of prospective ETFs, including BlackRock’s proposed Bitcoin ETF, in that capacity.

The SEC has been the subject of both industry and Congressional criticism over its perceived “regulation-by-enforcement” approach. Critics argue that the regulator is punitively targeting cryptocurrency exchanges in the wake of the collapse of FTX, while advocates say that many cryptocurrencies are indeed securities and that further regulation is not required to establish the SEC’s jurisdiction.

The tussle over jurisdiction has dampened the share prices of crypto-exposed companies; Coinbase is up nearly 119% year-to-date but remains well off its pre-crypto-winter levels. Microstrategy

Coinbase is also due to make one last filing in its motion to appeal. The company moved 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 responded in turn by continuing to argue that Coinbase “did” intermediate “transactions involving investment contracts.”

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

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