This week, those following the story of spot Bitcoin Exchange-Traded Funds (ETFs) in the US may have heard of the Depository Trust & Clearing Corporation (DTCC) for the first time. After the firm listed the Blackrock iShares Bitcoin Trust on its website, many ETF watchers read it as a sign that the ETF’s approval by the Securities and Exchange Commission (SEC) was imminent. But why?
As it turns out, the DTCC is one of the most important players in American financial markets and a key gatekeeper that no prospective Bitcoin ETF will be able to avoid.
In the 1970s, the DTCC’s predecessors, the National Securities Clearing Corporation (NSCC) and the Depository Trust Company (DTC), revolutionized the way American stock brokers bought and sold securities.
Before they arrived on the scene, rising trade volumes had led to a paperwork crisis on Wall Street, where the cumbersome, outdated process of exchanging physical share certificates threatened to choke the US stock market.
Having ushered in the era of electronic trading by implementing the first computerized clearing and settlement systems, the two companies were soon established as crucial infrastructure providers for the financial services sector.
By 1999, when the DTCC became a holding company for the two firms, there wasn’t a single US stock exchange that didn’t employ their technology.
What’s more, after a decade of accelerated globalization, by the dawn of the new millennium the firm was embedded in the international economy, powering cross-border US securities trades around the world.
Since then, the corporation has helped further digitize financial markets, updating its platforms for the 21st century and pioneering new technologies such as securities tokenization.
As well as expanding its physical reach, DTCC platforms have evolved to embrace the full spectrum of securities — from company shares to treasuries, and of course, ETFs.
And now, the corporation may soon be responsible for overseeing a significant part of the global crypto market too.
On Monday, October 23, news that the DTCC had listed the Blackrock iShares Bitcoin Trust ($IBTC) on its website triggered a Bitcoin market rally that saw the cryptocurrency’s price rocket to its highest value this year.
The assumption underpinning the market’s positive response to seeing $IBTC listed alongside actively traded ETFs is that the issuer holds confidence in the SEC approving the fund.
As word of the DTCC listing spread, ETF watchers flocked to confirm the news themselves, apparently causing the firm’s website to crash under the increased traffic.
But while excitement has reached a fever pitch, registration with the DTCC is only one step in the process of bringing a new ETF to market. What’s more, it turns out $IBTC actually entered the DTCC’s list of active and prospective ETFs in August, but the media only reported it this week.
According to Reuters , the company said the registration process was “standard practice,” which fund issuers carry out “in preparation for the launch of a new ETF.”
However, “appearing on the list is not indicative of an outcome for any outstanding regulatory or other approval processes,” a DTCC spokesperson emphasized.