The Depository Trust and Clearing Corporation (DTCC), a financial services company that provides clearing and settlement services for the financial markets, has announced that it will not allocate any collateral to exchange-traded funds (ETFs) with exposure to Bitcoin or cryptocurrencies. In a notice released on April 26, the DTCC stated that starting from April 30, 2024, it will implement changes to collateral values for specific securities during its annual line-of-credit facility renewal, which could impact position values in the collateral monitor. This means that ETFs and similar investment instruments with Bitcoin or other cryptocurrencies as underlying assets will not be assigned any collateral value, resulting in a 100% reduction in their collateral value.
However, it is important to note that this decision only applies to inter-entity settlement within the line of credit system. Cryptocurrency enthusiast K.O. Kryptowaluty clarified that cryptocurrency ETFs can still be used for lending and as collateral in brokerage activities, depending on individual brokers’ risk tolerance.
While the DTCC has taken a stance against crypto ETFs, other traditional players have not followed suit. Goldman Sachs’ clients have started reentering the crypto market in 2024, driven by renewed interest after the approval of spot Bitcoin ETFs.
The introduction of spot Bitcoin ETFs in the United States has generated increasing institutional interest in this investment product. Within three months of their launch, all U.S.-based Bitcoin ETFs have accumulated over $12.5 billion in assets under management. In February, approximately 75% of new Bitcoin investments came from the 10 spot Bitcoin ETFs approved in the U.S. on January 11.
However, net inflows to the ETFs have recently slowed down, and multiple ETF issuers have reported significant outflows. According to Farside Investors, spot Bitcoin ETFs in the U.S. experienced a net outflow of $218 million on April 25, following a $120 million outflow the previous day. Grayscale’s GBTC ETF also saw a notable single-day outflow of $82.4197 million. Overall, the total net outflows from GBTC amount to a significant $17.185 billion.
In other news, a woman has been accused of a $6 billion scam, and there is a China loophole for Hong Kong Bitcoin ETFs, as reported by Asia Express magazine.