Among asset managers around the world, anticipation for the approval of bitcoin spot has reached a fever pitch. ETF. While the potential for these ETFs to generate significant capital and investment in the cryptocurrency industry, including bitcoin, is notable, there are concerns that analysts may have overlooked.
BitGo CEO Mike Belshe has expressed reservations about the likelihood that the US Securities and Exchange Commission (SEC) approving spot bitcoin ETF applications due to the integration of Coinbase as an exchange and custodian.
Belshe maintains that the risks associated with Coinbase’s multifaceted role have not been fully understood, which could lead to further rejections before positive news emerges.
Could bitcoin ETFs Face More Rejections?
In a recent interview With Bloomberg, Belshe shared his thoughts on the state of bitcoin ETF applications and their challenges. While he expresses optimism and acknowledges positive conversations between applicants and the SEC, Belshe believes another round of rejections may be necessary to address concerns about market structure.
Belshe quotes SEC Chairman Gary Gensler emphasis on separating exchanges from custody, establishing parallels with the functioning of the stock market. Belshe also alludes to Coinbase’s role as an exchange, custodian and broker-dealer, highlighting risks within the entity that may not be fully understood.
Belshe’s concerns arise from Coinbase’s integration of multiple features within its platform. Although he clarifies that Coinbase is not at the same level as bankruptcy FTX crypto exchange and his co-founder Sam Bankman-Fried, Belshe says they are using a “similar playbook.”
Coinbase presents risks that the crypto community may not fully understand by operating as an exchange, custodian, and broker-dealer simultaneously. Belshe suggests that the SEC could require a complete separation of these functions before approving the bitcoin ETF.
BitGo CEO Advocates Custodian Role in bitcoin ETF
While highlighting the challenges of Coinbase integration, Belshe emphasizes that viable solutions are available. He points to custodians like BitGo, which specialize in custody services without engaging in exchange or trading activities.
By using custodians like BitGo, the industry can address the need for separation between exchanges and custody, which could pave the way for SEC approval of bitcoin spot ETFs, Belshe said.
Overall, as enthusiasm for bitcoin spot ETFs continues to grow, BitGo CEO Mike Belshe has expressed concerns about Coinbase integrating as an exchange and custodian.
Belshe believes the SEC may reject bitcoin ETF applications until Coinbase’s functions are completely separated. As the industry anxiously awaits regulatory decisions, the debate surrounding Coinbase’s role in bitcoin spot ETFs adds a layer of complexity to the ongoing discussions.
At the time of writing, bitcoin, the leading cryptocurrency in terms of trading volume, is currently valued at $36,100. This price reflects a decline of 1% in the last 24 hours and a drop of more than 2% in the last seven days.
Featured image from Shutterstock, chart from TradingView.com
