coinbase Warns of Crypto Liquidation Risks Due to Debt Obligations
Coinbase has issued a warning about the financial stability of publicly traded crypto vehicles. The firm believes that debt-related issues could lead some companies to sell off their crypto assets.
In a recent 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.If crypto prices drop and these companies canāt refinance their debts, they may be forced to liquidate their holdings. This could trigger broader market sell-offs.
However, Coinbase remains cautiously optimistic. The firm sees potential for growth in the second half of 2025 as more traditional companies start to accumulate crypto assets. On the regulatory front, Coinbase expects notable changes for the U.S. digital asset industry. The shift away from āregulation by enforcementā has created momentum for new legislation.
Two key bills, the STABLE and GENIUS Acts, are pending in the Senate.If reconciled and signed into law,they could introduce consumer protections and AML compliance requirements for stablecoin issuers. The Digital Asset Market Clarity Act could also define the regulatory roles of the SEC and CFTC.
Simultaneously occurring, the SEC is reviewing about 80 ETF applications. Decisions on several proposals are expected between July and October. Despite the risks, Coinbase believes Bitcoin remains well-positioned, while only select altcoins may outperform based on project-specific fundamentals.
