Goldman Sachs: Regulatory Developments to Drive Next Wave of Institutional Cryptocurrency Adoption

Goldman Sachs on Crypto Adoption and Market Trends

Goldman Sachs said regulatory progress is the most important factor driving the next wave of institutional adoption of cryptocurrencies according to the report. The bank emphasized that regulatory clarity is helping overcome one of the main barriers for traditional financial institutions looking to enter the crypto space. Market structure legislation and stablecoin regulations are seen as key developments in this context.

The bank upgraded Coinbase to a Buy rating, citing the company's shift toward less volatile crypto infrastructure and long-term growth potential. The move reflects expectations that Coinbase will benefit from a growing subscription and services segment, which is less cyclical than trading. Goldman also raised its price target for Coinbase to $303, implying a 30% upside.

In contrast, eToro was downgraded to Neutral from Buy. The bank cited intensifying competition and rising customer acquisition costs as challenges for the firm's expansion plans. This shift reflects broader trends in the crypto brokerage industry, where stability and innovation in infrastructure are increasingly valued over trading volume alone.

Why Did This Happen?

Goldman Sachs analysts argue that regulatory reform is a key catalyst for institutional adoption. The firm highlighted that the U.S. market structure legislation could unlock tokenization, decentralized finance (DeFi), and broader institutional flows in 2026.

This regulatory shift has made crypto more attractive to institutional investors who previously avoided the space due to uncertainty.

The change in the regulatory environment has also been supported by leadership changes at the SEC. With Paul Atkins confirmed as chair, the regulator has taken a more constructive approach to crypto, dropping many enforcement cases and withdrawing from court fights. This has created a more favorable backdrop for crypto companies and infrastructure providers.

How Did Markets React?

Coinbase shares surged over 4% in pre-market trading following the upgrade from Goldman Sachs according to market data. The move was seen as a vote of confidence in the company's long-term strategy, particularly its expansion into custody, staking, and other infrastructure services. This contrasts with eToro, where shares dipped modestly after the downgrade.

The market reaction underscores the growing influence of institutional investors in the crypto space. As regulatory clarity increases, more traditional players are expected to enter the market, bringing with them new capital and infrastructure demands according to industry analysis.

What Are Analysts Watching Next?

Goldman Sachs analysts are closely watching the legislative calendar for market structure and stablecoin laws. These developments could have a major impact on how crypto is integrated into traditional financial systems according to market experts. The firm expects significant progress in the first half of 2026, which could further accelerate institutional adoption.

Analysts are also tracking the performance of crypto infrastructure providers, including Coinbase, Robinhood, and Interactive Brokers according to market reports. These companies are seen as better positioned for long-term growth than trading-focused firms, which remain vulnerable to market swings.

In addition, Goldman emphasized the importance of tokenization and DeFi in the broader crypto ecosystem. These innovations are expected to expand the use cases for crypto beyond trading, into payments, asset management, and other core financial services according to industry research. This shift could redefine how institutions view and use digital assets.