Financial services firm Depository Trust and Clearing Corporation (DTCC) has announced that it will no longer allocate collateral or provide loans to ETFs with exposure to Bitcoin or other cryptocurrencies.
As of April 30, DTCC may adjust the collateral value of certain securities during the annual credit facility renewal, which may impact the value of positions in Collateral Monitor.
The statement released on April 26th specifies that ETFs and similar investment vehicles with Bitcoin and other cryptocurrencies as underlying assets will have zero collateral value.
However, crypto enthusiast KO Kryptowaluty pointed out in a post on X that this change only concerns intercompany payments within lines of credit.
A line of credit is a loan agreement between a financial institution and an individual or business that allows the borrower to withdraw funds up to a preset credit limit.
Borrowers can use these funds as needed and typically pay interest only on the amount borrowed.
According to CryptoWalti, the use of crypto ETFs as collateral for lending and brokerage activities is likely to continue unaffected, depending on the risk tolerance of individual brokers.
While DTCC has expressed opposition to crypto ETFs, other existing players have not. Goldman Sachs clients are starting to re-enter the crypto market in 2024, encouraged by renewed enthusiasm following the launch of the Spot Bitcoin ETF.
Since their introduction, these ETFs have attracted significant interest from institutional investors, with assets under management exceeding $12.5 billion within three months.
In February, the 10 Bitcoin ETFs approved in the US on January 11 accounted for an estimated 75% of new Bitcoin investments.
Despite this surge, inflows have declined in recent weeks. Farside Investors reported his $218 million net outflow from the Spot Bitcoin ETF on April 25, following his $120 million outflow the previous day.
Meanwhile, on April 25, the U.S. Securities and Exchange Commission (SEC) once again postponed a decision on the spot Bitcoin ETF option application. Regulators have extended the deadline to solicit public comments within the next 21 days and seek rebuttals within 35 days.
The agency questions whether options on spot bitcoin ETFs should follow the same rules as stocks.
Several exchanges have applied to offer options trading on these ETFs, including Cboe Exchange, Inc., BOX Exchange LLC, MIAX International Securities Exchange LLC, Nasdaq ISE, LLC, and NYSE American LLC.
Additionally, the SEC has postponed its decision on Grayscale and Bitwise's application to implement a Bitcoin options ETF, setting the next review date for May 29th.
