Coinbase is raising red flags about the financial health of publicly traded crypto vehicles, cautioning that debt-related obligations could soon force some firms to liquidate their crypto holdings.
In a report from Coinbase, the firm emphasized concerns around refinancing risks and loan-to-value ratios, but said most large firms still have options to avoid liquidation.
“The risk of forced selling pressure arises because many of these PTCVs have issued convertible bonds to raise cheap money to buy various crypto assets,” the report read.
The report continued to say that if crypto prices fall and companies can’t refinance their debts, they may be forced to sell their crypto holdings, triggering broader market liquidations.
Coinbase highlighted that while loan-to-value ratios are manageable, the ability to refinance is crucial, and capital structures in private transit capital vehicles are inconsistent and hard to monitor.
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Optimism due to corporate accumulation
Despite these risks, Coinbase remains cautiously optimistic, especially as corporate accumulation of crypto assets continues. The firm sees room for growth in the second half of 2025, as more traditional companies take interest in on-balance sheet crypto strategies.
On the regulatory front, Coinbase anticipates that 2H25 will be transformative for the U.S. digital asset industry. A shift away from “regulation by enforcement” under the previous administration has created momentum for new legislation.
The STABLE and GENIUS Acts—pending in the Senate—could be reconciled into a single bill and signed by President Trump before the August 4 Congressional recess. These bills would introduce consumer protections, reserve rules, and AML compliance requirements for stablecoin issuers.
Coinbase also flagged the potential impact of the Digital Asset Market Clarity Act, which aims to define the regulatory roles of the SEC and CFTC. If passed, the bill could establish a dual framework for distinguishing between “digital commodities” and “investment contract assets.”
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 and only select altcoins may outperform based on project-specific fundamentals.
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