Fitch said sharp Bitcoin price swings could quickly erode collateral backing these securities, increasing the risk of losses for lenders and investors.
Credit rating company Fitch Ratings has flagged a high degree of risk associated with Bitcoin-backed securities, a warning that could complicate the expansion of crypto-linked credit products among institutional investors.
In a Monday assessment, Fitch said Bitcoin-backed securities, financial instruments typically structured by pooling Bitcoin (BTC) or Bitcoin-linked assets and issuing debt against that collateral, carry “heightened risks” that “are consistent with speculative-grade credit profiles.”
The agency said such characteristics could place the products in speculative-grade territory, a designation associated with weaker credit quality and a higher likelihood of losses.
