ALERT Effective Tuesday, DTC to assign 100% haircut to all crypto investments

Hfcomms

Hfcomms

EN66iq
April 27, 2024
Bill’s Commentary:

“This is obviously huge news! I am still wrapping my head around “why” and what it means? My very first thought was that DTC does not want a collateral implosion that affects the entire daisy chain (good luck with that!). My guess is they know bubbles revert to and below the mean and ultimately finds its intrinsic value? What is the intrinsic value of a (any) cryptocurrency? And they just within the last year elevated gold to “tier one” status on balance sheets. Curious? I do not think so…”

https://twitter.com/i/web/status/1783978665874719129
View: https://twitter.com/741trey/status/1783978665874719129?


billholter.com

BillHolter.com

Precious Metals Expert
billholter.com billholter.com

 
Hfcomms

Hfcomms

EN66iq
Not trusting a random twitter that even Bill Holter found I went to the DTCC website to see if I could find it and lo and behold I did so this is real and I posted the link from the website on the bottom of the first post. This is a significant headwind to crypto on the commercial side if firms can't pledge their crypto investments as collateral.
 
Hfcomms

Hfcomms

EN66iq
Dreamer said:
Why were firms ever allowed to post crypto holdings as collateral? To create the bubble?
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No idea. My guess would be that the crypto market has exploded so much higher over the last several years that commercial entities holding large crypto positions saw such an increase in the value of their holdings that they pledged them as collateral to the DTCC for other settlement trades.

The DTCC might be expecting a real pullback in crypto or is attempting to get a little leverage out of the system. I never knew that crypto holdings could be pledged as collateral either.
 
S

Squid

Veteran Member
I doubt this is tied to the current market but likely tied to future market.

True there is large fluctuations in Bitcoin but what gets my attention is the 100% or the we are not going recognize Bitcoin as having any real value.

I think the speed of the ETF market growth in Bitcoin by ‘the market’ has spooked tptb. They kind of allowed Bitcoin to grow as a precursor imho to the movement to the government digital currencies as a precursor to single world digital currency.

They may be afraid Bitcoin may become too big and too integrated to the financial system to be able to make illegal when they force digital currencies on us. These power hungry fascist see the power of being able to monitor all of our purchases and the control that would give them and that is too great of power not to grab.
 
Hfcomms

Hfcomms

EN66iq

DTCC Announces 100% Crypto Haircut Policy​


In Brief​

  • DTCC has decided to impose a 100% haircut on all investment instruments backed by crypto assets.
  • Some analysts speculate that this move could lead to reduced liquidity and increased risk for investors
  • However, others argued that the DTCC decision might not significantly affect crypto ETF performance.
The Depository Trust and Clearing Corporation (DTCC) has decided to implement a 100% haircut on all investment instruments backed by cryptocurrency assets.

This decision is part of a broader risk management review for other asset classes, including corporate notes and bonds rated B1 to B3, whose haircuts were raised to 70%.

How Will DTCC’s Decision Impact Bitcoin ETFs?​

DTCC is a financial services firm that offers clearing and settlement services in the financial markets. It plays a pivotal role in the trading operations of recently launched Bitcoin ETFs.

Notably, DTCC’s decision will take effect on April 30 and could impact position valuation in the collateral monitor. As a result, DTCC services will no longer permit entities to use crypto exchange-traded products as collateral for financial transactions conducted through the DTC system.

“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 stated.
Click to expand...
This announcement has triggered speculation regarding its potential ramifications, with some suggesting it could initiate a reversal in Bitcoin ETF inflows. Autism Capital expressed concerns over potentially reduced liquidity and increased investor risk. Additionally, the firm noted that the move could mitigate Wall Street leverage maneuvers.

beincrypto.com

DTCC Announces 100% Crypto Haircut Policy

The Depository Trust and Clearing Corporation (DTCC) revealed a 100% haircut on investment instruments backed by crypto like Bitcoin ETFs.
beincrypto.com beincrypto.com
 
phloydius

phloydius

Veteran Member
In a world of huge swings of crypto currencies, I could easily see why someone would not want to offer a loan to someone with it posted as collateral. With margin (and thus margin calls when collateral value drops) being a serious risk to traditional finance, it totally makes sense for those in that world, especially when you consider the following:

"When the stock market goes up by 8% in a year they call it a good year. When the crypto market rises or falls 30% in a single day they call it Tuesday."

Also, worth mentioning: The Hong Kong Bitcoin & Ether ETFs are suppose to go live for trading the same day as this DTCC notice is effective: April 30th.
 
Hfcomms

Hfcomms

EN66iq
phloydius said:
Also, worth mentioning: The Hong Kong Bitcoin & Ether ETFs are suppose to go live for trading the same day as this DTCC notice is effective: April 30th.
Click to expand...

Didn't know that either. What I do know is that the money powers (primarily the world's central banks) don't like competition and they want to institute their CBDC's after the present system collapses. Private crypto currencies and especially BTC being the most popular would be a threat to their system.

That is why I always thought that sooner or later they would either make alternate crypto currencies illegal or find a way to collapse BTC with a lot of bag holders and present their CBDC's as a 'safer' alternative. They are/were willing to tolerate BTC in order to get people excited about the idea but if they can't control it then they won't allow it to be used.
 
W

WalknTrot

Veteran Member
Not up on DTCC or crypto, but is the effective message "Remove it from all our account transactions or lose it"? You have until this date?

If so, doesn't necessarily mean they "know something". Probably just means they are coming to their senses.
 
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phloydius

phloydius

Veteran Member
Hfcomms said:
Didn't know that either. What I do know is that the money powers (primarily the world's central banks) don't like competition and they want to institute their CBDC's after the present system collapses. Private crypto currencies and especially BTC being the most popular would be a threat to their system.
Click to expand...

While the US Federal Government (and the West's banking system) is fighting hard against crypto, and pushing very hard to identify every American / European that holds crypto (with KYC requirements and starting to go after decentralized exchanges)... large areas of the world are starting to embrace crypto much more strongly. China is an example.

WalknTrot said:
Not up on DTTC or crypto, but is the effective message "Remove it from all our account transactions or lose it"? You have until this date?
Click to expand...

No. It the message is "We will no longer let you use crypto as collateral for money we loan to you."
 
phloydius

phloydius

Veteran Member
WalknTrot said:
No longer yes, but also the accounts that are using it now as collateral are gonna go bust (along with the client) unless the loans are closed out (paid) or crypto is replaced by acceptable legitimate collateral...?
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In theory, yes. In practice, I doubt it. Nothing I've seen indicates how much crypto is being used by the banking system as collateral, but since the only ETF they could use is brand new and there are only a few crypto-adjacent EFTs (like ticker ETHE) I would think it is unlikely that there is very much.

You are correct in that the client bank (like Wells Fargo as an example) will need to replace any crypto assets used for collateral with a different collateral (most likely Treasury Bills)... unless they are not currently using that full line of credit. In which case, the line of credit would simply be reduced. Another option (in the knock-on-effects category) is if they have $X worth of crypto as collateral, and the line of credit is reduced by $X, then instead of replacing $X worth of collateral, they could sell $X value worth of other assets (like corporate or government bonds) that are on margin from the loan, effectively bringing the balance in-line.
 
Hfcomms

Hfcomms

EN66iq
I do know that liquidity in the financial system is a big issue right now. The Fed finally closed it's Bank Term Funding Facility and as those loans mature those discounted bonds that the Fed took at par value go back to the troubled banks that got the loans. And the yield on the 10 year treasury isn't getting any lower so those bonds are still deeply underwater.

Add to that the bloodbath in commercial real estate loans that affect mainly the regional banking system and there is a lot of trouble brewing out there. I'd imagine that they are tightening up with what they will accept for collateral and loans are going to be harder to get going forward.

The markets are still believing that the Fed will cut rates a couple of times this year and that is probably the only reason there hasn't been a big selloff as of yet. The Fed keeps jawboning that they are going to cut but even if they do I think they are at the point of pushing on a string.

The system is broken....and the US is bankrupt.
 
energy_wave

energy_wave

Has No Life - Lives on TB
Hfcomms said:
April 27, 2024
Bill’s Commentary:

“This is obviously huge news! I am still wrapping my head around “why” and what it means? My very first thought was that DTC does not want a collateral implosion that affects the entire daisy chain (good luck with that!). My guess is they know bubbles revert to and below the mean and ultimately finds its intrinsic value? What is the intrinsic value of a (any) cryptocurrency? And they just within the last year elevated gold to “tier one” status on balance sheets. Curious? I do not think so…”

https://twitter.com/i/web/status/1783978665874719129
View: https://twitter.com/741trey/status/1783978665874719129?


billholter.com

BillHolter.com

Precious Metals Expert
billholter.com billholter.com

Click to expand...
So Blackrock is going to allow this? They own crypto too. What would this do to Grayscale.
 
Hfcomms

Hfcomms

EN66iq
energy_wave said:
So Blackrock is going to allow this? They own crypto too. What would this do to Grayscale.
Click to expand...

It's interesting that this past week Weds thru Friday BlackRock recorded zero BTC volume. And Grayscale has been selling all week. Also notice that Van Eck has had zero volume since last Weds as well. And DTCC made their announcement on the 26th but I'd bet that the big funds got a heads up a few days earlier.



Screenshot 2024-04-28 at 11.21.09 AM.jpg
 
B

bracketquant

Veteran Member
bassaholic said:
I bet you don't own any. Probably best it stays that way. This is for people that get it.
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The greedy people that do get it, know that it is the best current investment out there, for huge profits, short term. However, the powers that be MUST make autonomous money illegal, lest they no longer will be the powers that be.

The current mining of Bitcoin uses up an obscene amount of energy. So-called climate change will likely be the claimed reason for banning all autonomous cryptos. That's probably after the insider lawmakers get their profits first.
 
Bubble Head

Bubble Head

Has No Life - Lives on TB
bracketquant said:
The greedy people that do get it, know that it is the best current investment out there, for huge profits, short term. However, the powers that be MUST make autonomous money illegal, lest they no longer will be the powers that be.

The current mining of Bitcoin uses up an obscene amount of energy. So-called climate change will likely be the claimed reason for banning all autonomous cryptos. That's probably after the insider lawmakers get their profits first.
Click to expand...
How much energy to produce one bitcoin? I don’t do bitcoin just read about it. Curiosity more than want.
Asian markets should be open by now. See what the news brings to the Asian masses.
 
bassaholic

bassaholic

Veteran Member
bracketquant said:
The greedy people that do get it, know that it is the best current investment out there, for huge profits, short term. However, the powers that be MUST make autonomous money illegal, lest they no longer will be the powers that be.

The current mining of Bitcoin uses up an obscene amount of energy. So-called climate change will likely be the claimed reason for banning all autonomous cryptos. That's probably after the insider lawmakers get their profits first.
Click to expand...

There's a lot more to crypto than this. A lot.

They will take control of the market (already have control but will get tighter) without making it illegal.

Digitization is the future....and one method of total control.
 
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