S&P Global lowered the credit rating Coinbase Global Inc. (NASDAQ:COIN), citing a “negative” outlook for the cryptocurrency exchange.
On Thursday, the firm downgraded Coinbase’s long-term issuer credit rating and unsecured debt rating to ‘BB’ from ‘BB+’.
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The ratings agency said it revised its assessment of the cryptocurrency exchange’s financial risk after reporting weak second-quarter earnings.
“The negative outlook reflects uncertainty over the duration of the downturn in the crypto market and the company’s ability to operate effectively through prudent operating cost management,” S&P Global said in a note.
“It also reflects the potential for further market share loss in a challenging competitive environment, as well as heightened regulatory risk.”
S&P Global pointed to a 30% decline in Coinbase trading volume in the second quarter, while total spot cryptocurrency trading volume was down just 3% across all other sites, a sign that “competitive risk” for the US crypto market has increased. .
His opponent’s decision Binance remove transaction fees bitcoin (CRYPTO:BTC) as the price of this asset collapsed, the risk of lower fees in the retail channel Coinbase, which accounts for 80% of its total income, has increased.
“Regulatory hurdles for Coinbase have intensified with the recent disclosure of securities fraud allegations by the SEC against a former employee, and most recently with investigations into its staking programs and the classification of certain assets,” writes S&P Global.
Coinbase’s stock price rose 0.70% after trading on Thursday, according to data from Benzinga Pro.