In a significant ruling, the Depository Trust and Clearing Corporation (DTCC) has taken a decisive stance against exchange-traded funds (ETFs) with exposure to Bitcoin or other cryptocurrencies.
DTCC Sets Date for Collateral Policy Amendment
The corporation has set April 30 as the date to enact alterations to its collateral valuation for these specialized securities during its annual line-of-credit facility renewal.
DTCC views this adjustment as a means to revolutionize position valuations within the collateral monitor. Notably, for spot Bitcoin ETFs such as BlackRock’s IBIT and Fidelity Investment’s FBTC, as well as other crypto ETPs, this modification would lead to a complete reduction of 100% in their collateral value.
Insights from Cryptocurrency Enthusiast
Renowned cryptocurrency enthusiast K.O. Kryptowaluty has offered insights into this development, highlighting that it primarily impacts inter-entity settlement within the line of credit system. He further elaborated that the utilization of crypto ETFs for lending and as collateral in brokerage activities is expected to continue unabated, contingent upon individual brokers’ risk tolerance levels.
Impact on ETF Investors
The implications of DTCC’s collateral policy adjustment extend to ETF investors, as noted by Autism Capital. The announcement has the potential to introduce reduced liquidity and heightened risks for investors in spot crypto ETFs.
A Glimmer of Hope Amidst Uncertainty
Despite potential challenges, some view DTCC’s decision as a possible avenue to mitigate the intrusive involvement of Wall Street firms in the burgeoning crypto ETF landscape. The ultimate ramifications of this ruling remain uncertain, with time being the ultimate arbiter of its effects on investors and other stakeholders.
