Regulatory Headwinds and Analyst Optimism Collide for Coinbase

The landscape for cryptocurrency regulation in the United States is shifting once more, placing Coinbase squarely in the spotlight. As lawmakers in Washington renew their efforts to craft comprehensive rules, a new bipartisan bill has emerged from the Senate that presents both potential clarity and significant risk for the exchange. The coming weeks will serve as a critical gauge of investor sentiment toward Coinbase's future trajectory.

Despite the regulatory clouds gathering in the capital, several prominent financial institutions have recently reinforced their positive outlook on Coinbase shares (COIN). A series of analyst upgrades and reiterated bullish ratings have provided countervailing momentum.

• Goldman Sachs upgraded COIN to a "Buy" rating on January 5, lifting its price target from $294 to $303. Concurrently, it downgraded competitor eToro to "Neutral."
• Following suit on January 8, Bank of America also raised its rating to "Buy," setting a $340 price target. Analysts cited Coinbase's expansion beyond core crypto services into areas like stock trading and prediction markets.
• Bernstein maintained its "Outperform" rating but adjusted its price target downward from $510 to $440 on January 6.
• BTIG reaffirmed its "Buy" rating and $420 target in December following a product showcase.

The consensus among 25 covering analysts remains a "Buy," with an average price target of approximately $382.57. This reflects a prevailing market expectation that Coinbase is positioned to benefit from the expanding crypto ecosystem, even as regulatory challenges persist. The stock itself has seen a notable recovery, gaining roughly 19% over the past 30 days. However, at a recent price of $252.69, it remains well below its 52-week high, and with a Relative Strength Index (RSI) nearing 73, it is currently signaling overbought conditions.

The Senate's Proposed Crypto Framework

The source of both potential opportunity and concern is the extensive draft of a crypto market structure bill introduced by U.S. Senators on Monday. Its core objective is to establish clearer jurisdictional boundaries between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), while creating a unified regulatory framework for digital assets. Success in this endeavor could pave the way for broader institutional adoption of cryptocurrencies—a long-sought goal for the industry.

The path to passage, however, is politically fraught. Ahead of a scheduled hearing in the Senate Banking Committee on Thursday, over 75 proposed amendments have been filed, according to CoinDesk. The proposed changes cover a wide spectrum:
- Outright prohibitions on interest payments for stablecoins
- Restrictions on government officials participating in crypto investments
- Detailed disclosure requirements for stablecoin offerings

Proponents of these amendments span both parties, including Republican Senators Thom Tillis, Cynthia Lummis, and Tim Scott, as well as Democrats Elizabeth Warren, Ruben Gallego, and Angela Alsobrooks, highlighting the contentious nature of the details. In a further sign of the unsettled bipartisan consensus, the Senate Agriculture Committee has postponed its own related hearing to January 27, indicating negotiations will be protracted.

Should investors sell immediately? Or is it worth buying Coinbase?

A Direct Threat to a Key Revenue Stream

For Coinbase, one element of the proposed legislation is particularly sensitive: the treatment of interest and reward payments on stablecoin holdings. This business model is a major contributor to the company's revenue, and Coinbase is actively lobbying in Washington to preserve it.

Currently, through its "Coinbase One" program, the platform offers a 3.5% reward on USDC balances. The company's stablecoin-related revenue is projected to reach approximately $1.3 billion in 2025. The current draft bill threatens this income stream by proposing to ban interest payments made solely for holding stablecoins. It would, however, permit rewards tied to specific activities, such as making payments or participating in clearly defined loyalty programs. The SEC and CFTC would be tasked with crafting joint rules mandating detailed disclosures for any permitted stablecoin rewards.

Coinbase's Chief Policy Officer, Faryar Shirzad, has framed the issue in geopolitical terms, arguing that attractive stablecoin yields support the U.S. dollar's role in the global digital currency competition. This point is underscored by China's announcement of plans to pay interest on its digital yuan, making the regulatory outcome crucial for Coinbase's strategic position.

The Road Ahead: Policy and Earnings in Focus

Two imminent events will shape Coinbase's near-term future. The first is the Senate Banking Committee's markup session on Thursday, January 16, a key procedural hurdle. For the bill to pass the full Senate, it will require 60 votes—a broad bipartisan majority. Nathan Dean, a Bloomberg Intelligence analyst, suggests the slow progress to date may have pushed the probability of passage in the first half of the year below 70%.

Regardless of the legislative timeline, investor attention will quickly turn to the company's upcoming earnings report. Coinbase is scheduled to release its Q4 2025 financial results on February 12. Current analyst estimates project quarterly earnings per share of $0.93 and full-year 2025 EPS of $7.94. Thus, the stock's direction will be dictated by a dual narrative: the degree to which policymakers constrain the stablecoin revenue model, and Coinbase's ability to meet Wall Street's high earnings expectations with its forthcoming report.