Coinbase shares rise 14% as Grayscale ETF ruling takes effect

Coinbase CEO Brian Armstrong criticized the US Securities and Exchange Commission. He also said that the cryptocurrency exchange is looking to invest more outside the US

Carlos Jasso Bloomberg | Getty Images

Cryptocurrency Exchange Shares Coinbase Up about 14% Tuesday morning as optimism about the approval of a long-awaited bitcoin spot ETF boosted shares. It was a key deadline for the company, which was fighting the Securities and Exchange Commission in federal court in Manhattan.

Shares Grayscale's Bitcoin Trust It was also up nearly 7% in Tuesday morning trading. Grayscale saw a win in a federal appeals court on Monday when a judge's mandate that the SEC review the company's Bitcoin ETF proposal took effect.

Coinbase's share price, which was also lifted by this final decision, often mirrors the broader cryptocurrency markets. The company is one of the largest crypto custodians and has been used by a number of prospective ETFs, including BlackRock's proposed Bitcoin ETF, in this regard.

The SEC has been the subject of criticism from both industry and Congress for its perceived “enforcement by regulation” approach. Critics argue that the regulatory crackdown is aimed at cryptocurrency exchanges in the wake of the FTX collapse, while advocates say that many cryptocurrencies are indeed securities and that further regulation is not needed to establish the SEC's jurisdiction.

Jurisdiction disputes have weakened share prices of companies with crypto exposure; Coinbase is up nearly 119% year-to-date, but remains well below pre-crypto winter levels. MicrostrategyAnother firm with crypto exposure saw its shares rise 12% in early morning trading on Tuesday, but similarly down from 2022 levels.

Coinbase must also make a final statement of appeal. company moved to dismiss The SEC's complaints in August argued, in part, that the SEC's action was beyond the SEC's authority and that the assets in question did not constitute securities under the Howey Test. The SEC responded in turn continues to argue that Coinbase “conducted” an intermediate “transaction involving investment contracts.”

Coinbase's response in federal court is due Tuesday.