Benchmark targets 33% gain for Coinbase stock as crypto approaches end of 'air pocket' on regulatory clarity

As the regulatory "air pocket" weighing on the crypto industry potentially nears its end, Benchmark sees Coinbase as well positioned to benefit.

The investment banking and financial services firm has initiated coverage on COIN, setting a $252 price target based on a 21x multiple of projected 2026 earnings per share — implying a 33% upside.

Coinbase is the largest U.S.-based crypto exchange, targeting both retail and institutional investors, with a 66% domestic market share, $404 billion in assets and more than 250 digital assets available for trading, Benchmark Fintech and Digital Assets Senior Research Analyst Mark Palmer wrote in a Wednesday note to clients.

Benchmark noted Coinbase's stock price was nearly cut in half as the pro-crypto Trump administration-spurred rally faded amid subsequent tariff concerns and the continued wait for regulatory clarity in the industry. However, in Palmer's view, it's now time to become bullish again with new crypto legislation now on the horizon.

COIN closed up 8.6% on Tuesday at $190, according to The Block's Coinbase price page , having fallen 45% from a peak of $343.62 on Dec. 6. The crypto exchange currently has a market cap of around $50 billion.

'Game-changing' stablecoin and crypto market structure legislation

U.S. lawmakers have been escalating efforts to pass both a stablecoin bill and a crypto market structure bill under the new Congress.

Over the past few weeks, committees in the House and Senate have advanced two stablecoin bills — the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act in the House and the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act in the Senate — seeking to regulate stablecoin issuers with licensing requirements, risk management rules and 1:1 reserve backing. Those bills held a majority of Republican support but picked up several Democratic votes as well. While similar, their approaches differ and will have to come to a consensus.

Palmer noted on Wednesday that enactment on a stablecoin bill is said to be on track in the next 60 to 90 days, bringing about changes to the regulatory treatment of digital assets in the U.S. that has weighed on Coinbase and the crypto industry as a whole. "The increased adoption and use of stablecoin would particularly benefit COIN, which as the developer of the USD Coin (USDC) stablecoin in partnership with Circle (private), will receive a portion of interest income generated from the USDC reserves," he said.

The release of crypto market structure legislation could also be coming soon, according to House Financial Services Committee Chair Rep. French Hill, referencing a potential revised version of a bill called the Financial Innovation and Technology for the 21st Century Act, nicknamed FIT 21, that passed the House last year with 71 Democrats voting in support, including former Speaker Rep. Nancy Pelosi.

Given its complexity, passing a crypto market structure bill is viewed as more challenging than passing a bill to regulate stablecoins. However, some members of Congress, including Republican Senator Tim Scott, chair of the Senate Banking Committee, have suggested potential passage of a crypto market structure bill by August, Palmer noted.

"We believe as these key pieces of digital assets legislation are enacted in the coming months, there could be a new wave of demand for crypto by an expanded set of institutional investors," Palmer said. "Many institutional investors with a strong interest in digital asset investing have held back due to the absence of certainty regarding the U.S. government’s treatment of crypto — a missing element that the legislation would provide."

Coinbase 'particularly well positioned'

Palmer said Coinbase's 13-year track record as a compliance-first platform with no security breaches makes the crypto exchange particularly well positioned to benefit from the potential upcoming regulatory clarity, arguing its trusted brand and broad product suite give it an edge over newer competitors. 

Additionally, Coinbase's growing focus on subscription and services revenue could act as a buffer against crypto market volatility, Palmer said, predicting its non-trading revenues to grow at a 36% compound annual growth rate through 2026 compared to a CAGR of around 21% for trading revenues.

"At current levels, COIN no longer discounts the soon-to-improve environment for crypto," he said. "With recent multiple compression to nearly pre-election levels, investors appear to have lost sight of the extent to which stablecoin and market structure legislation could reignite crypto market activity."