Major Regulatory Move: OCC Proposes Zero Valuation for Spot Crypto ETPs to Manage Risks

Regulatory Shift and Its Purpose

The Options Clearing Corporation (OCC) has proposed new rules aimed at strengthening risk controls for crypto-related financial instruments.

Key Provisions Explained

• Valuation of spot crypto ETPs held by clearing members or their affiliates will be set to zero.
• Implementation of Specific Wrong-Way Risk (SWWR) management to address potential custody risks.
• Credit letters and debt securities issued by government-sponsored enterprises (GSEs) will no longer be accepted as eligible collateral.

Implications for the Market

If adopted, the proposal could reshape the clearing framework for crypto derivatives, prompting firms to reassess risk exposure and investment strategies for related products.