The Coinbase cryptocurrency exchange (CEX) announces having “no financing exposure” in Celsius, 3AC, and Voyager. While the troubled firms in the Cryptoverse suffer from a lack of risk control across counterparties, Coinbase opines incessant client-centric risk management control shapes its crypto financing strategy.
In the latest Coinbase blog post, Heads of Coinbase Institutional, Prime Finance, and Credit and Market Risk, Brett Tejpaul, Matt Boyd, and Caroline Tarnok, respectively, comprehensively detail sufficient risk controls at Coinbase.
Minimal or no hedges, massive investments in the Terra ecosystem, and a huge leverage given to 3AC, soared risk and concentration across the crypto industry.
In the blog post, its senior executives categorically deny Coinbase having any ‘counterparty exposure’ in the troubled entities cited above. But also clarify that ‘Coinbase’s venture program did make non-material investments in Terraform Labs.’
Coinbase states to have avoided getting caught in ‘risky lending practices’, and have instead kept a prudent client focus. It’s because increasingly now its ‘institutional clients demand a high-quality financing counterparty.’
Bankruptcy and restructuring are slowly entering the crypto industry. Coinbase experts, though, believe it isn’t necessarily a crypto problem, but instead a credit-centric issue.
They reason that liabilities of the crypto firms in the short-term got them ‘overleveraged’, creating an imbalance vis-à-vis their long-term illiquid assets.
Offering a thoroughly ‘trusted bridge to the cryptoeconomy,’ Coinbase’s prudent risk management is the key to its long-term growth strategy.
Coinbase holds customer assets 1:1, inherently having risk management on priority in its product design. Its institutional lending is always ‘backed by collateral’, having ‘100%+ in collateral’, the CEX states in its blog.
Also read: Coinbase to Launch Futures Product Mixing Tech Stocks and Crypto
