BitGo CEO Mike Belshe expressed a bleak outlook for the approval of Bitcoin ETFs in the United States. Despite the prevailing optimism within the crypto industry, Belshe predicts that the U.S. Securities and Exchange Commission (SEC) will likely continue its trend of rejecting spot Bitcoin ETF applications. This assertion by Belshe, a prominent figure in the crypto custody space, casts a shadow over the much-anticipated integration of Bitcoin into mainstream financial products.
Belshe’s concerns stem from a critical issue in the cryptocurrency market: the intertwining of exchange and custody services. The SEC’s apprehension, as highlighted by Belshe, revolves around the need for a clear demarcation between these two functions to mitigate the risks of market manipulation. This stance isn’t new; the SEC has rejected over 20 Bitcoin ETF applications in the past, primarily citing reasons related to potential market manipulation and inadequate customer protection.
The Coinbase factor
One of the key points Belshe raised concerns the role of Coinbase in this landscape. Coinbase’s involvement has been viewed with skepticism as a custody partner for several potential ETFs. Belshe suggests that the risks associated with Coinbase are not fully understood, hinting at the possibility that the SEC might demand a complete separation of exchange and custody roles before greenlighting any ETF applications.
This cautious approach by the SEC is not without reason. Despite the regulated status of some crypto custody providers like Anchorage, BitGo, and Coinbase, the agency remains wary of approving products that blend the roles of trading platforms and asset custodians. This apprehension aligns with Belshe’s view that the SEC is particularly cautious of exchange-custody dualities.
Looking ahead: A continued struggle for approval
The road to Bitcoin ETF approval appears fraught with challenges, reflecting the broader regulatory complexities in the crypto industry. While regulated crypto custody providers offer a glimmer of hope, the skepticism rooted in the SEC’s historical reluctance is hard to ignore. Over 20 Bitcoin ETF proposals have been turned down to date, with market manipulation and customer protection concerns at the forefront.
Belshe’s insights underscore a critical need within the crypto market: the establishment of clear regulatory guidelines and structures. These are essential not only for Bitcoin ETFs but also for the broader acceptance and integration of innovative cryptocurrency products into the financial mainstream.
