Spot Bitcoin ETF Applications to be Rejected by SEC, Predicts BitGo CEO
Mike Belshe, the CEO of BitGo, believes that the U.S. SEC will issue rejections for another round of spot market Bitcoin exchange-traded fund (ETF) applications. In a recent interview on Bloomberg Television, Belshe stated that the SEC will likely reject ETF bids due to the dual nature of modern crypto firms, including companies like Coinbase that serve as both crypto exchanges and custodians.
Belshe expressed optimism about the ETF but predicted another round of rejections before any positive news is shared. He highlighted the need to separate custody from exchanges, citing Gary Gensler’s emphasis on market structure. Belshe also suggested that the approval of such applications would be contingent on separating exchanges and custody services.
“A lot of these applications are with Coinbase custody. Coinbase, while I’m not trying to say that they’re an FTX by any means, they are taking on also kind of that same playbook. In addition to being an exchange and a custodian, they recently got approval from an FCM (futures commission merchant), of course, they got a broker-dealer. What this means [is] there are a lot of risks in that entity that aren’t fully understood, and I think that the SEC could quite likely come back and say ‘Nope, you got to separate out these things fully before we’re going to move forward.’”
The Future of Spot Bitcoin ETFs: Separation of Services is Key
Given the predicted rejections, Belshe anticipates that the SEC will request a complete separation of services before considering any ETF applications. While noting the excitement surrounding ETFs and the increasing proximity to approval, Belshe highlighted the need to heed Gensler’s preferences regarding market structure.
Hot Take
According to BitGo CEO Mike Belshe, the separation of services between exchanges and custody is crucial, and until this structure is addressed, another round of spot market Bitcoin ETF rejections from the SEC is expected.
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