United

2024

Impact

<h2 class="wp-block-heading" id="introduction">Introduction</h2>
<p>The Depository Trust and Clearing Corporation (DTCC), a key player in financial clearing and settlement services, has taken a significant stance by announcing that it will not assign any collateral value to exchange-traded funds (ETFs) linked to <a href="https://btc-pulse.com/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin </a>or other cryptocurrencies. This policy, set to take effect on April 30, means these assets cannot be used as collateral in securing loans.</p>
<h2 class="wp-block-heading" id="dtcc-s-impact-on-loan-extensions">DTCC’s Impact on Loan Extensions</h2>
<p>This bold move by the DTCC is expected to have a profound effect on the way loans are extended within the financial sector, especially affecting inter-entity settlements that rely on these assets as collateral. While individual brokers may choose to handle cryptocurrency ETFs based on their risk assessments, the overarching decision by <a href="https://twitter.com/WuBlockchain/status/1784057927734874392" target="_blank" rel="noopener noreferrer nofollow">DTCC</a> could lead to a reevaluation of lending practices linked to these volatile assets.</p>
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   <p lang="en" dir="ltr">DTCC: No collateral value will be given for any ETF or other investment vehicle that includes Bitcoin or any other cryptocurrency as an underlying investment, hence will be subject to a 100% haircut. DTCC settled the vast majority of securities transactions in the United States.…</p>— Wu Blockchain (@WuBlockchain) <a href="https://twitter.com/WuBlockchain/status/1784057927734874392?ref_src=twsrc%5Etfw" target="_blank" rel="noopener noreferrer nofollow">April 27, 2024</a>
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<h2 class="wp-block-heading" id="market-reactions-and-alternatives">Market Reactions and Alternatives</h2>
<p>Despite the DTCC’s firm stance, other significant financial players like Goldman Sachs have adopted a more favorable approach towards the cryptocurrency market, particularly with the introduction and success of spot Bitcoin ETFs in the U.S. These ETFs have quickly garnered <a href="https://btc-pulse.com/bny-mellon-invests-in-bitcoin-etfs-interest/" rel="noopener noreferrer nofollow">institutional </a>attention, accumulating substantial assets under management. However, recent trends have shown a slowdown, with significant outflows reported by Farside Investors.</p>
<h2 class="wp-block-heading" id="international-moves-hong-kong-s-strategy">International Moves: Hong Kong’s Strategy</h2>
<p>On the global front, Hong Kong is positioning itself as a key player in the cryptocurrency market. By the end of April, the city plans to launch its own spot Bitcoin and Ethereum ETFs, following the <a href="https://btc-pulse.com/hong-kong-to-embrace-cryptocurrency-approval/" rel="noopener noreferrer nofollow">approval </a>by the Securities and Futures Commission (SFC). This move aims to bolster Hong Kong’s standing as a digital asset hub, offering a range of cryptocurrency-related investment products.</p>
<h2 class="wp-block-heading" id="conclusion">Conclusion</h2>
<p>While DTCC’s decision marks a cautious approach to cryptocurrency in the U.S. financial landscape, other institutions and global markets are moving towards a more integrated and possibly favorable stance on digital assets. The differing strategies highlight the ongoing debate and adaptation of the financial sector to the evolving nature of cryptocurrencies and their role in investment portfolios.</p>

DTCC Halts Collateral Valuation for Bitcoin-Linked ETFs, Shaking Loan Extensions

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