ETFs Most Exposed To Coinbase’s Crash

ETFs Most Exposed To Coinbase’s Crash

The cryptocurrency exchange’s stock slid more than 20% Wednesday.

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Reviewed by: Dan Mika
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Edited by: Dan Mika

Coinbase Global Inc.’s stock cratered more than 20% on market open Wednesday after reporting lower-than-expected revenue and revealing a new clause for customer assets in the case of a bankruptcy. 

The cryptocurrency exchange reported earnings of $1.17 billion, missing consensus estimates by $1.48 billion in the first quarter. It also recorded a loss of $1.26 per share against analysts estimating a gain of 91 cents per share. 

Trading volume collapsed from $547 billion in the final quarter of 2021 to $309 billion in the most recent period, likely in part due to a turbulent environment and a risk-off attitude in the markets to begin the year. 

Compounding that miss was Coinbase’s quarterly report adding a new risk suggesting the company may have to treat customer crypto assets as part of its estate in the event of a bankruptcy and would treat its customers as unsecured creditors. 

Unsecured creditors are the last in line to recoup any assets as part of a bankruptcy case. While cash in Coinbase accounts are held in accounts guaranteed up to $250,000 by the Federal Deposit Insurance Corporation, crypto assets in Coinbase accounts or on other exchanges do not have that protection. 

Coinbase CEO Brian Armstrong later said on Twitter the disclosure was part of an SEC mandate for custodians holding crypto assets, but he doesn’t believe a bankruptcy court would consider customer assets as the company’s assets.  

He also said the company is not at risk of bankruptcy. 

Coinbase’s market capitalization now stands at approximately $12.4 billion compared with $65.4 billion upon debuting as a public company last April and its all-time high of $76.36 billion in November 2021. 

ETFs Most Exposed To Coinbase 

Thematic ETFs tracking digital currency adoption have the largest allocations to Coinbase, with the First Trust SkyBridge Crypto Industry and Digital Economy ETF (CRPT) having a 12.68% allocation in the company. The Global X Blockchain ETF (BKCH) holds an 11.99% allocation and is the only other fund to have a double-digit weight to the stock. 

At a market value level, ARK Invest Management Inc. has the most exposure to Coinbase. Cathie Wood’s firm is the largest institutional owner of the company, with a 4% stake, according FactSet data, and its flagship ARK Innovation ETF (ARKK) held the largest nominal stake of any ETF, with $595.34 million as of close of trading Wednesday. 

Vanguard also holds a combined $309.6 million in the company through four of its ETFs, with the Vanguard Total Stock Market ETF (VTI) accounting for $168.17 million of that total. 

 

ETFs With Largest Allocation To COIN

Ticker FundCOIN AllocationCOIN Market Value
CRPTFirst Trust SkyBridge Crypto Industry and Digital Economy ETF12.68%$5.81M
BKCHGlobal X Blockchain ETF11.99%$11.13M
FDIGFidelity Crypto Industry and Digital Payments ETF9.88%$646.71K
ARKFARK Fintech Innovation ETF9.35%$108.63M
BITQBitwise Crypto Industry Innovators ETF8.99%$8.35M
ARKWARK Next Generation Internet ETF8.13%$156.68M
GFOFGrayscale Future of Finance ETF7.23%$834.39K
DAPPVanEck Digital Transformation ETF7.23%$4.01M
VBBValkyrie Balance Sheet Opportunities ETF7.21%$62.34K
BIDSAmplify Digital and Online Trading ETF6.18%$27.20K

 

ETFs With Largest Market Value Exposure to COIN

Ticker FundCOIN AllocationCOIN Market Value
ARKKARK Innovation ETF6.03%$595.34M
VTIVanguard Total Stock Market ETF0.06%$168.17M
ARKWARK Next Generation Internet ETF8.13%$156.68M
ARKFARK Fintech Innovation ETF9.35%$108.63M
VUGVanguard Growth ETF0.12%$103.54M
QUALiShares MSCI USA Quality Factor ETF0.19%$41.96M
BLOKAmplify Transformational Data Sharing ETF3.73%$31.38M
FINXGlobal X FinTech ETF3.71%$27.66M
MGKVanguard Mega Cap Growth ETF0.15%$19.50M
VVVanguard Large-Cap ETF0.07%$18.38M

 

Contact Dan Mika at [email protected], and follow him on Twitter

Dan Mika is a reporter for etf.com. He has previously covered business for the Ames Tribune and Cedar Rapids Gazette in Iowa, and BizWest Media in Fort Collins, Colorado. Dan holds a bachelor's degree in journalism from Truman State University.