The Issue of Regulation
Michael Saylor stated, at the recently concluded Bitcoin 2023 conference in Miami, that the lack of regulatory clarity in cryptocurrencies is deliberate. Saylor, citing data from CoinGecko, revealed that the number of publicly traded companies using Bitcoin as a treasury reserve asset is still relatively low, with only 24 listed companies.
However, the Bitcoin maximalist emphasized that the poor rate of adoption is due to a number of factors. The accounting treatment of the token is as an indefinite and intangible asset.
Saylor explained further that this accounting method discourages potential investors because it does not accurately reflect Bitcoin's value. In addition, the entrepreneur emphasized that the complexity of the crypto market, coupled with the emergence of alternative digital currencies and recent regulatory actions, has instilled a sense of caution in conservative CFOs.
Saylor believes that Bitcoin's credibility has been bolstered by the deficiencies observed in other cryptocurrency businesses, highlighting its uniqueness as a product. Saylor hypothesizes that as regulatory obstacles are resolved and accounting practices surrounding Bitcoin become more standardized, a greater number of companies may eventually contemplate incorporating Bitcoin into their asset allocations.
While discussing the lack of comprehensive regulatory clarity in the crypto space, the Bitcoin proponent asserted that it is a deliberate act on the part of the authorities, as opposed to an oversight.
Are MicroStrategy (MSTR) Shares More Valuable Than Coinbase (COIN)?
In a recent report, the German investment bank Berenberg recommended MicroStrategy (MSTR) shares as a superior alternative to Coinbase (COIN) for investors seeking to enter the cryptocurrency industry. According to the report, investors with a bearish outlook on Coinbase shares and a desire to short the stock should consider combining their short position with a long position in MicroStrategy.
Notably, since Coinbase's direct listing began in April 2021, the report emphasizes a significant correlation of 0.96 between the two stocks. According to the note, the classification of most crypto tokens as unregistered securities by the US SEC exposes these digital assets and the platforms that facilitate their trading to potential regulatory measures.
In addition, the note stated that the US regulator and its counterparts in other jurisdictions have been transparent in classifying Bitcoin as a commodity, as opposed to a security. Mark Palmer and Hassan Saleem, two analysts, consider MicroStrategy to be a viable alternative to Coinbase.
MicroStrategy stands out as an attractive option due to its distinctive business model centered on acquiring and holding Bitcoins. According to Berenberg, the optimistic macro drivers that propel Bitcoin's demand should also have a bullish effect on MicroStrategy shares.
In recent months, investors' concerns about de-dollarization, which refers to the potential decline of the US dollar's dominance, have cast Bitcoin in a more favorable light. Recent statements made by SEC Commissioner Gary Gensler regarding Coinbase indicate his view that the company is not in compliance with securities laws, according to the analysts.
In the meantime, the analysts emphasized Gensler's concerns regarding the company's defiant attitude toward regulatory scrutiny. They imply that such conduct could expedite the initiation of any potential enforcement action.
According to the report, the impact of enforcement action against Coinbase on the company's revenues would be substantially greater than its overall revenue. The report added that Berenberg maintains a hold rating on Coinbase shares and has set a price target of $55, while MicroStrategy is rated a buy with a price target of $340.
In the meantime, current data indicates that MicroStrategy holds a sizeable amount of approximately 140,000 BTC, or approximately $3.8 billion based on current market prices.