Coinbase and Crypto Stocks Rise. Wall Street Competition Is Welcome for Now. 

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The launch of a major new competitor is rarely good news for a stock but cryptocurrency exchange

Coinbase Global

is proving the exception, at least in the short term. A new Wall Street-backed crypto exchange was giving a lift to cryptocurrency prices and related stocks on Wednesday. 

Coinbase

(ticker: COIN) stock was up 2.7% in premarket trading. Cryptocurrency miner

Marathon Digital

(MARA) was up 4.7%, while

MicroStrategy

(MSTR), a business intelligence company with significant crypto holdings in its corporate treasury, was up 3.1%. 

All the stocks were riding the tailwind of a surge in the price of

Bitcoin
and other cryptocurrencies on Wednesday. Sentiment around the crypto sector was boosted by Tuesday’s launch of EDX Markets, a crypto exchange backed by a consortium of traditional Wall Street firms including

Charles Schwab

(SCHW) and Citadel Securities. 

Investors look to be relieved that there is institutional interest in the crypto sector which could secure its future in the U.S. Crypto stocks have been under pressure since the Securities and Exchange Commission charged

Coinbase

and its rival Binance earlier this month, alleging that the crypto exchanges had sold unregistered securities.

The good feeling in the sector might not last. While EDX’s launch offers a potential path forward for crypto trading in the U.S., its limited offering of trading options is a sign of how regulatory pressures are still shaping the industry. 

“We view an eventual outright [cryptocurrency] ban as highly unlikely as adoption is already too widespread, but regulatory requirements will only increase in the coming months and years,” wrote Claudio Wewel , a currency strategist at asset manager J. Safra Sarasin, in a research note. “Throughout this process, the crypto space is likely to consolidate further before hitting a bottom.”

Write to Adam Clark at adam.clark@barrons.com