DTCC regulates securities for Bitcoin-linked ETFs
The Depository Trust and Clearing Corporation (DTCC) – a financial services firm that provides clearing and settlement services for financial markets – has stated that it does not and will not provide any guarantees for bitcoin or other cryptocurrencies (ETFs). Extending loans on them.
DTCC Notice Beginning April 30, 2024, DTCC will implement changes in collateral values for certain securities during its annual credit servicing facility renewals, which may affect the spot values in the collateral.
The notice, released on April 26, means that ETFs and similar investment instruments with Bitcoin (BTC) or other cryptocurrencies as underlying assets will not have any collateral value, resulting in a 100% reduction in their collateral value.
However, in X's post, cryptocurrency supporter KO Kryptowaluty explained that this only applies to agreements between parties in the credit system line.
A line of credit is a credit arrangement between a financial institution and an individual or entity that allows the borrower to withdraw funds up to a predetermined credit limit. The borrower can access these funds as needed and typically pays interest only on the amount borrowed.
According to Kryptowaluty, the use of ETFs for lending cryptocurrency and as collateral in brokerage operations will continue to be unaffected, depending on the risk appetite of individual brokers.
While DTCC takes a stand on crypto ETFs, it does not do the same for other traditional players. Goldman Sachs clients have begun to enter the crypto market, spurred by renewed interest following the approval of a spot bitcoin ETF in 2024.
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The introduction of spot Bitcoin ETFs in the United States has led to increased institutional interest in this investment product. Within three months of launching, all US-based Bitcoin ETFs have accumulated more than $12.5 billion in assets under management.
An estimated 75% of new Bitcoin investments in February came from the 10 spot Bitcoin ETFs approved in the US on January 11.
However, net inflows into ETFs have recently declined. Several ETF issuers have recently reported higher expenses. According to Farside Investors, Bitcoin ETFs in the United States saw net inflows of $218 million on April 25, following outflows of $120 million the previous day.
Greyscale's GBTC ETF saw a notable one-day inflow of $82.4197 million. According to data from Farside, the total net flow from GBTC is a whopping $17.185 billion.
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