Financial analysts at Berenberg have highlighted the impact of recent reports on Hamas crypto donations on the progress of global crypto regulations. In a research document dated October 18, the wealth manager stated that Coinbase’s lobbying efforts in the United States may be affected by Hamas’ use of digital assets to finance its operations.
Concerns for Coinbase
Lead analyst Mark Palmer explained that the caution towards Coinbase is not due to its operational performance, but rather the legal obstacles presented by the Securities and Exchange Commission (SEC) and global regulatory bodies in the crypto market. Despite these challenges, Coinbase remains committed to advocating for regulatory clarity and has plans to influence Congress through lobbying campaigns.
“The recent Hamas incidents could now turn the tide away from the company as anti-crypto lawmakers now have a rallying point to delay regulations or pass more bottleneck regulations, a move which would tighten the market amid falling prices,”
– Mark Palmer
Reports have emerged over the past week regarding Hamas funding through digital assets, leading to seizures and increased scrutiny. Israeli authorities recently seized cryptocurrency in accounts linked to Hamas donations. The police statement confirmed that the assets were diverted into state control with the help of Binance. Tether, the company behind USDT stablecoin, also froze wallets believed to be connected to funding wars in Ukraine and Israel, which revealed a combined total of $873,118.
Legal Status of Crypto
Berenberg commented, “While Hamas announced last April that it would no longer use crypto for fundraising due to the ability of authorities to track its movement on blockchain ledgers, we believe the recent headlines are likely to make clarity around the question of crypto’s legal status even more elusive.”
The declining trading volumes in recent financial quarters by Coinbase were also highlighted in the research paper. The company’s Q3 2022 financials showed a significant 52% drop in trading volumes compared to the previous quarter, marking the lowest growth point since its listing on Nasdaq.
“We continue to view COIN’s consumer take rate as being at risk of compression due to competition for market share within a lower volume crypto space,”
– Research Paper
The decline in spot exchange figures can be attributed to lawsuits by regulators, declining trader confidence, and macroeconomic factors.
