A long battle with the US Securities and Exchange Commission will weigh on Coinbase’s close, according to TD Cowen. Stephen Glagola downgraded the cryptocurrency exchange operator’s company shares for underperformance, citing “additional risks to operations” as the SEC cracks down on crypto banking. The downgrade from TD Cowen comes after the SEC this week issued a Wells notice to Coinbase warning the company of potential violations of US securities laws. Wells notices usually come before formal charges from the agency, and give respondents an opportunity to respond to the charges. “COIN appears headed for litigation against the SEC,” he wrote in a Friday note. “We expect this to create an overhang in the stock and remove the positive [near-term] Catalysts include Shapella’s ETH upgrade and US derivative launch. price target in the shares, suggesting that they could fall nearly 46% from the closing there, and close to the closing level for 2022 when it plummeted about 86. So far this year, the stock rose more than 90%. He added that reclassification. of crypto assets as securities could deal a heavy blow to Coinbase and “exacerbate the loss of trading volume.” Glagola also sees Coinbase’s staking business at risk after Kraken shut down its own staking operations in a settlement with the SEC. Staking serves the potential of a wide revenue opportunity for the exchange, and is a strategy used by some investors to get passive results in crypto holdings by tying tokens in the network for some time. business that will consider the component of Coinbase subscription and service revenue, wrote Glagola. – CNBC’s Michael Bloom contributed reporting