DTCC rules out collateral for Bitcoin-linked ETFs
This notice means that exchange-traded funds and similar investment instruments with Bitcoin or other cryptocurrencies as underlying assets will not be assigned any collateral value.
The Depository Trust and Clearing Corporation (DTCC) — a financial services company that provides clearing and settlement services for the financial markets — stated that it will not allocate any collateral to exchange-traded funds (ETFs) with exposure to Bitcoin or cryptocurrencies and will not extend loans against them.
DTCC’s announcement states that effective April 30, 2024, the DTCC will implement changes to collateral values for specific securities during its annual line-of-credit facility renewal, potentially affecting position values in the collateral monitor.
This notice released on April 26 means that ETFs and similar investment instruments with Bitcoin (BTC) or other cryptocurrencies as underlying assets will not be assigned any collateral value, resulting in a 100% reduction in their collateral value.
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Author: Amaka Nwaokocha
