DTCC: Bitcoin and cryptocurrency ETFs can no longer be used as collateral starting April 30th.

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DTCC: Bitcoin and Cryptocurrency ETFs No Longer Eligible as Collateral

The Depository Trust and Clearing Corporation (DTCC), a U.S. clearinghouse and settlement company, announced through its DTC Risk Division in a notice that as of April 30th, certain securities' collateral values will be amended.

The key changes include:

• For securities rated B1 to B3, the discount rate for collateral will be increased from 50% to 70%.

• Bitcoin, cryptocurrency ETFs, or other investment tools will no longer be considered as 100% collateral.

The responsibilities of the U.S. DTCC include services such as clearing, settlement, and custody, with DTC focusing primarily on custody and being one of the largest securities depositories globally.

Impact on Bitcoin ETF Demand?

With cryptocurrency-related ETFs no longer being accepted as collateral, some commentators believe this could lead to a decrease in liquidity and demand, as specific investors may no longer be willing to hold assets that are not eligible as collateral.

The crypto community member @JuanSanchez0x0 commented on Twitter:

Cryptocurrencies have no value, so we cannot use them as collateral, but we still have to pay taxes on them because they have value...

@zeroxkeegan also stated:

Many other securities also cannot be used as collateral, such as stocks priced below $5. Most trades are settled through delivery-versus-payment (DvP) settlement, not using credit lines. This move will not affect broker financing or the ability to use cryptocurrency ETFs as collateral, as it still depends on the risk tolerance of the brokers. This is nothing to be alarmed about; it's just market pessimism looking for trouble.