Coinbase Global ( NASDAQ: COIN ) stock retreated as much as 5.2% in Thursday premarket trading after D.A. Davidson analyst Christopher Brendler downgraded shares of the cryptocurrency exchange to Neutral from Buy on the basis of its outsized year-to-date rally even as regulatory pressures ramp up. Since the start of 2023, COIN has more than doubled ( +106.4% ), coinciding with broader risk-on sentiment towards the crypto market and other risk assets, namely technology stocks. That's despite recent crypto-focused enforcement actions taken by the U.S. Securities and Exchange Commission. In just the last week, the regulator charged crypto exchange Kraken for failing to register its staking platform, and separately was said to have taken aim at stablecoin issuer Paxos Company Trust for breaching investor protection laws. Also, the SEC on Feb. 14 proposed to make it harder for crypto firms to become qualified custodians. As such, the SEC has indirectly targeted three of Coinbase's ( COIN ) business lines -- stablecoins, staking and custody. The "SEC is clearly taking a more combative stance on crypto," Brendler wrote in a note, following November's multibillion-dollar collapse of crypto exchange FTX ( FTT-USD ). "While we still agree with mgmt's view that improved clarity and a level playing field should ultimately prove to be good for both Coinbase ( COIN ) and the sector overall, the near-term path looks increasingly treacherous," he contended. The slump in COIN shares comes even as bitcoin ( BTC-USD ) shot up 7.6% to $24.40K at the time of writing. Seeking Alpha contributor The Digital Trend thinks the SEC's crackdown on crypto is a good thing for Coinbase .
