Coinbase Warns About Crypto Liquidation Risks Due too debt Obligations
Coinbase has issued a warning about the financial health of publicly traded crypto vehicles. The company is concerned that debt-related issues could force some firms to sell thier crypto assets.
In its report, Coinbase highlighted the risks associated with refinancing and loan-to-value ratios. Many publicly traded crypto vehicles have issued convertible bonds to fund their crypto investments, notes the firm. If crypto prices drop and companies cannot refinance their debts, they may have to sell their assets.
While loan-to-value ratios are manageable, the ability to refinance is crucial, cautioned Coinbase. The capital structures of private transit capital vehicles are inconsistent and hard to monitor.
Despite these risks, Coinbase remains cautiously optimistic. The firm sees continued growth as traditional companies take interest in on-balance sheet crypto strategies. coinbase expects this trend to continue in the second half of 2025.
on the regulatory front, Coinbase anticipates that 2H25 will be transformative for the U.S. digital asset industry. The firm believes that new legislation, such as the STABLE and GENIUS Acts, could be signed into law by August 4.
Meanwhile, the SEC is reviewing about 80 ETF applications, including multi-asset index funds, staking-enabled products, and single-name altcoin ETFs. Decisions on several proposals are expected between July and October.
Coinbase concluded that while forced selling and yield risks persist,Bitcoin (BTC) remains well-positioned. Only select altcoins may outperform based on project-specific fundamentals, according to the firm.
