Coinbase Global’s (COIN) security infrastructure and regulatory adherence give it a “structural advantage” over rival global crypto exchanges, Cowen equity research analyst Stephen Glagola said in a note to clients Thursday.

Cowen initiated research coverage on Coinbase with an outperform rating and an $85 price target.The company's shares currently trade around $70 and have lost more than 70% in value this year as crypto and equity markets have weakened.The current structure of the exchange industry suggests the risk of competition driving fees lower in the near term is low because the platforms “also compete on security/trust of platform, access to assets, ease of use, customer support, and alternative products,” Glagola said in the note.Material fee compression is possible in the longer term as the industry matures, he said.Cowen estimates that Coinbase accounted for about 46% of U.S. regulated centralized exchange spot crypto volume as of 2021, up from 39% in 2020.Glagola said he expects the introduction of Coinbase's crypto derivatives in the U.S., assuming regulatory approval, to be a catalyst for growth along with the potential for “off-shore liquidity moving back to U.S.”Coinbase is the third-largest crypto exchange by volume worldwide, according to data from CoinMarketCap.

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