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Russia’s central bank said yesterday that stock exchanges in Russia shouldn’t list investment products related to cryptocurrency prices. And last month, the world’s largest cryptocurrency exchange, Binance, was banned from operating in the United Kingdom. Furthermore, the Federal Reserve’s indication that it will raise interest rates sooner than previously anticipated could lead to further pressure on such risky assets.
Thus, irrespective of one’s views on the prospects of cryptocurrencies, we think it’s better to stay away from the shares of fundamentally weak companies that benefit from cryptocurrency trading, for example The Charles Schwab Corporation (NYSE:SCHW), Coinbase Global, Inc. (COIN), and SoFi Technologies, Inc. (SOFI). These stocks are currently trading at valuations that are not justified by their growth prospects.
