Reports that Hamas used cryptocurrency to raise funds ahead of attacks in Israel could blunt Coinbase’s efforts to push friendly legislation for the US market. The Block reports this, citing a research note from Berenberg Capital Markets.
According to Mark Palmer, an analyst at the firm, the situation is complicated by ongoing pressure from the US regulators on the exchange.
“Our cautious stance on Coinbase Global is driven by the threat to its business from various regulatory actions and lawsuits it faces in the United States,” he said.
Palmer noted that the confrontation with the SEC is likely to weigh on the stock price of the bitcoin exchange for some time.
Against this backdrop, Berenberg raised its forecast for the company’s consumer-transaction revenues from $210 million to $240.8 million, to reflect expectations that consumer demand would decline more slowly.
According to TradingView, Coinbase shares rose 2.99% on Wednesday, to $77.46 at 7:59 p.m. ET. The monthly decline was 6.38% with a year-on-year gain of 112%.
Representatives of Coinbase confirmed their efforts to push legislative regulation of the cryptocurrency market in the United States, aimed in part at preventing the use of digital currencies for illicit purposes.
They noted that terrorist organisations, in financing matters, still largely rely on traditional financial systems and cash. Blockchain, they say, is designed to tackle this problem.
“The immutable cryptocurrency ledger simplifies tracking transactions of this type, acting as a deterrent to malefactors,” Coinbase said.
They emphasised the need for clear regulation of cryptocurrencies in the United States, as moving assets offshore would heighten the risk of illicit activity.
“[Targeted legislation] ensures compliance with sanctions and anti-money-laundering rules in the jurisdiction,” Coinbase noted.
Last week Israeli authorities froze cryptocurrency accounts that Hamas used to raise funds. According to an April report, since 2021 Israeli authorities arrested 189 Binance accounts linked to Hamas and ISIS.
In March 2023, Coinbase received a notice from the SEC about an investigation into the listing procedures on the platform and its products — Coinbase Prime, Coinbase Wallet and Coinbase Earn.
In June the regulator charged the company with allegedly operating as an unregistered exchange, broker and clearing agency.
Earlier, the US Chamber of Commerce expressed its support for Coinbase, noting that the Commission “deliberately creates a dangerous and uncertain environment” for crypto firms in the country.