The Depository Trust and Clearing Corporation (DTCC) has made an announcement stating that exchange-traded funds (ETFs) connected to Bitcoin (BTC) or other cryptocurrencies do not hold any collateral value as investments.
The DTCC, which offers clearing and settlement services to the US financial markets, has declared that digital asset-linked ETFs will be subjected to a 100% “haircut.”
“This means that no collateral value will be assigned to any ETF or other investment vehicle that includes Bitcoin or any other cryptocurrency as an underlying investment. Therefore, these investments will be subject to a 100% haircut.”
The DTCC’s new rules will go into effect on April 30, 2024, and are expected to impact the valuation of positions on the company’s collateral monitor.
Once implemented, the changes will prohibit entities from using Bitcoin or crypto-linked ETFs as collateral when seeking credit or financing through the DTCC.
In March, CoinShares, a digital assets manager, reported that institutions had invested a record-breaking $2.9 billion into crypto investment products on a weekly basis, primarily driven by Bitcoin ETFs.
On-chain analyst Willy Woo recently informed his one million followers on the social media platform X that the daily influx of capital stored on the Bitcoin network, largely due to the ETFs, had reached $2 billion per day. This is equivalent to the levels seen during the last major bull market.
“This time, the influx should surpass previous levels. Spot ETFs are significantly increasing the inflow. The measurement of inflows is done on-chain, so it includes all investors and is around 90% accurate. It also indicates that ETFs account for approximately 30% of the total flows at present.”
To be specific, the daily change in entity-adjusted realized capitalization is taken into account. Entity-adjusted Real Cap calculates the price paid for each BTC when it was transferred to the current HODLers. This measurement represents the USD stored in the network.
Source: Willy Woo/X
