Ripple Labs’ split victory over the U.S. Securities and Exchange Commission (SEC) elicited waves of optimism for Coinbase in its case against the regulator. However, analysts have warned that the exchange still faces an uphill climb.
Berenberg Capital Markets noted in a new report that the SEC still has a strong case against Coinbase regarding the status of several offerings. According to the report, the allegations of Coinbase offering unregistered securities to the public hold substance as evidence in the exchange’s recent move.
Barely a day after the court ruled that XRP did not amount to a security, Coinbase moved to suspend the operations of its staking service in four U.S. states. Coinbase stated in its announcement that pausing its staking service is not an admission of guilt but is designed to allow the legal proceedings to run their full course.
However, Berenberg warned that halting the staking service “serves as a reminder to investors that Coinbase is far from being in the clear” The analysts cited a statement from Coinbase that although no customer has lost assets through staking, there are several risks associated with the offering.
Experts have pointed out that the SEC will be pinning the bulk of its argument on Coinbase’s submission that staking poses a measure of risk to investors.
Back in March, the SEC issued a Wells notice to Coinbase confirming the start of enforcement action against the U.S.-based exchange. The SEC is accusing the exchange of running an unregistered securities exchange and offering the public unregistered securities through Coinbase Earn, its staking service.
Despite Berenberg’s warning, a number of Wall Street Banks have hailed XRP’s ruling as a net positive for Coinbase, expecting the exchange to include it in its defense.
“We view the ruling as incrementally positive for Coinbase, given the interpretation that in some cases a token may not be a security,” said U.K.-based Barclays Bank. “This may also provide incremental clarity for future token issuances.”
Coinbase faults the SEC
While both parties head to court, Coinbase has made some scathing allegations against the SEC, eliminating a settlement option.
Coinbase refuted all allegations of breaching securities laws, saying that it had sought the SEC’s feedback on its crypto rules but received “none” from the commission.
“We also reiterated that we stand by our listings process – we don’t list securities today – and repeatedly invited the SEC to raise any questions about any asset at all on our platform,” said Coinbase. “We met with the SEC more than 30 times over nine months, but we were doing all of the talking.”