The creator of Ethereum, Vitalik Buterin, has raised concerns about the possible dangers posed by companies that hold Ethereum (CRYPTO: ETH) in their balance sheets.
What Happened: Buterin warned that the overleveraging practices of companies holding ETH could potentially trigger a collapse of the cryptocurrency.
During a recent interview he said, “If you woke me up three years from now and told me that treasuries led to the downfall of ETH, then, of course, my guess for why would basically be that somehow they turned into an overleveraged game, and then at some point a 30% drop turned into forced liquidations that turned into a 50% drop and then a 70% and 90% drop, and then that got compounded with a loss of credibility.”
Despite his cautionary note, Buterin also underscored the advantages of companies maintaining an ETH treasury. He pointed out the social value of coordinating around ETH as an asset that companies can include in their treasury.
"The social aspect of coordinating around ETH just being an asset that companies can have as part of their treasury is good and valuable. Having different vehicles for people to have access to ETH, which is, I think, one of the reasons why people are buying into treasury companies instead of just hodling ETH directly, is also good,” he further said.
Also Read: Vitalik Buterin Stakes ‘Small Portion’ Of ETH Citing Safety Concerns, Cardano Creator Chimes In
“Giving people more options is good. There's always people in all kinds of different financial circumstances that put all kinds of requirements or incentives or properties on what formats of things that they participate in. There's definitely valuable services that are being provided there," Buterin added.
Why It Matters: The warning from Buterin comes at a time when ETH’s price is experiencing a significant surge, following the enactment of the GENIUS Act.
This legislation established a federal framework for the regulation of stablecoins, thereby bolstering Ethereum’s ecosystem.
As of the time of writing, ETH is trading at $4,224, marking an 8.5% increase in the last 24 hours and a 21.1% rise over the past week.
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