Oppenheimer analyst Owen Lau pulled his outperform rating on Coinbase (COIN), downgrading to the company's stock to perform after the crypto exchange disclosed the receipt of a Wells notice from the U.S. Securities and Exchange Commission late Wednesday. Lau also noted Tuesday’s Economic Report of the President, which was highly critical of the digital-asset industry.

Shares of Coinbase were down 13% in premarket trading on Thursday.

Given the unhealthy regulatory environment, Lau – who is otherwise supportive of blockchain technology and digital-asset development in the U.S. – said he is becoming increasingly concerned about the “fairness of the enforcement actions and the ability for the [crypto] ecosystem to grow with seemingly limited and shrinking support from the banking system.”

With Coinbase stock up about 118% year-to-date versus a gain of around 3% for the S&P 500, Oppenheimer’s Lau said he is moving to the sidelines.

“Recent strength in bitcoin (BTC) indicates that people have called for alternative financial systems, but it could also become the victim of its success,” Lau added.

Read more: SEC Warns Coinbase It’s Pursuing Enforcement Action Over Securities Violations