The financial services firm, DTCC, has determined that exchange-traded funds (ETFs) and similar investment products connected to Bitcoin or other cryptocurrencies will not receive collateral value.

The Depository Trust and Clearing Corporation (DTCC) has announced changes to the collateral values for specific securities regarding its annual line-of-credit facility renewal, effective April 30, 2024. This alteration could influence position values in the collateral monitor.

As per the notice released on April 26, ETFs and other investment products with Bitcoin or other cryptocurrencies as underlying assets will no longer be assigned collateral value. This decision will lead to a complete reduction in their collateral value.

Although this change applies particularly to inter-entity settlements within the line of credit system, cryptocurrency ETFs can still be used in lending and brokerage activities without any disruption, depending on individual brokers' risk tolerance. The borrowers can access funds up to an established limit from the line of credit, paying interest solely on the amount borrowed.

DTCC’s stance on crypto ETFs contrasts with the market's sentiment as traditional players like Goldman Sachs have witnessed clients reentering the crypto market in 2024 due to the approval of spot Bitcoin ETFs.