Ethereum founder Vitalik Buterin is identifying one major risk when it comes to companies holding ETH on their balance sheet.

In a new interview on the Bankless podcast, Buterin says that if companies holding ETH engage in overleveraging practices, it may lead to the altcoin’s collapse.

“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.”

However, Buterin says there are benefits in companies having an ETH 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.

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.”

ETH is trading for $4,013 at time of writing, up 3% in the last 24 hours.

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