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DTCC Sets Strict Collateral Rules for Crypto-Exposed ETFs, Adjusts Risk on Corporate Bonds

The collateral valuation for corporate notes or bonds rated B1 to B3 will be adjusted to use a haircut value of 70% Also, no collateral value will be assigned to any ETF or other investment vehicle that includes Bitcoin or any other cryptocurrency.

  • The DTCC will not use cryptocurrencies, including Bitcoin, as collateral for loans or allocate collateral to ETFs with crypto exposure, applying a 100% haircut.
  • Additionally, DTCC is set to adjust the collateral valuation for corporate notes or bonds rated B1 to B3 from a 50% to a 70% haircut during its annual credit facility renewal on April 30, 2024.

In its recent announcement, the Depository Trust and Clearing Corporation (DTCC) — a financial services firm offering clearing and settlement services for financial markets — declared that it will not allocate collateral to exchange-traded funds (ETFs) with exposure to Bitcoin or other cryptocurrencies, nor will it provide loans against them.

Effective April 30, 2024, during the annual renewal of the line-of-credit facility, the Depository Trust Company (DTC), a key component of the financial infrastructure of the United States and part of DTCC, will make changes to the collateral value for certain securities, potentially impacting the value of positions applied to the Collateral Monitor. 

Firstly, the collateral valuation for corporate notes or bonds rated B1 to B3 will be adjusted to use a haircut value of 70%, an increase from the previous 50%. Secondly, no collateral value will be assigned to any ETF or other investment vehicle that includes Bitcoin or any other cryptocurrency as an underlying investment, resulting in a 100% haircut.

In other news, recently, asset management firm Franklin Templeton introduced its Ethereum ETF, named the “Franklin Ethereum TR Ethereum ETF” and identified by the ticker EZET. This Ethereum spot ETF is now listed on the Depository Trust and Clearing Corporation (DTCC) website.


Edited by Harshajit Sarmah

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