DTCC Announces Changes to Collateral Valuation from April 2024

According to BlockBeats, the Depository Trust & Clearing Corporation (DTCC) has released a new document stating that from April 30, 2024, as part of the annual credit limit update, the DTCC will implement changes to modify the collateral value of certain securities. These changes could affect the position value applied in collateral monitors. The collateral valuation of corporate notes or bonds rated from B1 to B3 will be adjusted from 50% to 70%. Any Exchange Traded Funds (ETFs) or other investment tools, including Bitcoin or any other cryptocurrencies as underlying collateral, will have no collateral value and will therefore be subject to a 100% valuation discount. These changes are expected to have a significant impact on the way collateral is valued and could potentially affect the investment strategies of many firms. The move to discount the value of cryptocurrencies as collateral is particularly noteworthy, given the increasing interest in digital assets in recent years.