The Depository Trust and Clearing Corporation (DTCC), a company that provides financial, clearing and settlement services to financial markets, said it will not consider any collateral for exchange-traded funds (ETFs) involving bitcoin or cryptocurrencies and will not issue loans against them. .
DTCC's announcement states that, effective April 30, 2024, DTCC will make changes to the collateral value of specific securities at the time of annual credit facility renewals, potentially impacting the value of positions in the collateral monitor.
This notice, published on April 26, means that ETFs and similar investment vehicles with Bitcoin or other cryptocurrencies as underlying assets will not have any collateral value, resulting in a 100% reduction in their collateral value.
However, in his X-post, cryptocurrency enthusiast K.O.. Kryptovaluty clarified that this will only apply to payments between organizations under the credit lines system.
Source: K.O. Cryptovalue.
A line of credit is a loan agreement between a financial institution and an individual or entity that allows the borrower to borrow funds up to a predetermined credit limit. The borrower can access these funds as needed and typically only pays interest on the amount borrowed.
According to K.O. Kryptovaluty, the use of cryptocurrency ETFs for lending and as collateral in brokerage activities will continue without consequences, depending on the risk tolerance of individual brokers.
Although DTCC has come out against crypto ETFs, this is not the case for other traditional players. Goldman Sachs clients began re-entering the cryptocurrency market in 2024, driven by renewed interest following the approval of spot Bitcoin ETFs.
The introduction of spot Bitcoin ETFs in the US has stimulated increased institutional interest in this investment product. Within three months of launch, all US-based Bitcoin ETFs had amassed over $12.5 billion in assets under management.
CryptoQuant estimates that 75% of new Bitcoin investment in February came from the 10 spot Bitcoin ETFs approved in the US on January 11.
However, net inflows into ETFs have slowed recently. Several ETF issuers have recently reported significant outflows. According to Farside Investors, on April 25, there was a net outflow of $218 million from spot Bitcoin ETFs in the United States after an outflow of $120 million the day before.
Grayscale's GBTC ETF Posted Notable One-Day Outflows of $82.4197 Million. According to Farside, the total net outflow from GBTC is a significant $17.185 billion.