The Depository Trust and Clearing Corporation (DTCC), a company that provides financial services in terms of clearing and settlement services to financial institutions, stated that it won’t give extra security or loans to exchange-traded funds (ETFs) linked to Bitcoin or other cryptocurrencies.
DTCC’s Decision Impacting Bitcoin ETFs
Starting from April 30, 2024, DTCC will undergo some changes in holdings of certain securities while updating its annual line of credit. This impact will affect the holdings in the monitor.
The statement released on April 26 will impact all the EFTs and relevant investments that use cryptocurrency and will not get any extra value as collateral. This will lead to a 100% reduction in holdings.
According to a post by K.O. Kryptowaluty, this change will only affect settlements between entities within the line of credit system
A line of credit is an agreement between a financial institution and an individual or a company. This contract allows the company to use funds for financing or liquidity requirements within a limit given by the institution and have to pay interest on the amount they borrowed.
Spot Bitcoin ETFs have caught the attention of big institutions. In three months, Spot Bitcoin EFTshaves collected $12.5 billion in assets under management.
Kryptowaluty says brokers can still use EFTs as a holding or lending instrument, depending on their risk tolerance.
Although DTCC isn’t backing crypto ETFs, other traditional players are more open. In 2024, Goldman Sachs’ customers are making their way into crypto. The approval of spot Bitcoin ETFs has sparked their excitement due to the renewed interest
New spot EFTs generated almost 75% of new Bitcoin in February after the United States approved it on January 11.
A cash shortfall was recently experienced. In the United States, they recorded a withdrawal of $218 million on April 25, and $125 million on the previous day, as reported by Farside investors.
Grayscale’s GBTC ETF recorded an outflow in Bitcoin EFTs of $82.4197 million.
As per the statement of Farside, the total outflow is $17.185 billion.
