BitGo CEO Mike Belshe says the market should expect another round of spot Bitcoin ETF rejections as there are still issues to be resolved.
Although the crypto market is seeing signs that a spot Bitcoin (BTC) exchange-traded fund (ETF) will finally be approved somewhat in the near future, BitGo CEO Mike Belshe thinks the industry should prepare for yet another round of rejections by the U.S. Securities and Exchange Commission (SEC).
In an interview with Bloomberg, Belshe, who runs qualified crypto custodian in the U.S., noted that he’s optimistic about the eventual outcome for Bitcoin ETFs, but noted that the market structure still appears to be the main question, which remains unresolved.
Belshe particularly noted that prior to FTX’s collapse, disgraced founder Sam Bankman-Fried was attempting to persuade U.S. regulators to follow his vision of how the regulatory framework for the crypto industry should look like.
That bet did not pay off for Bankman-Fried, who is now facing a maximum sentence of 115 years in prison after he was found guilty of fraud and misappropriation of FTX customers’ funds.
However, the Wall Street giants appear to be going the same way with ETF applications, putting Coinbase Custody, a custodial service from the Coinbase crypto exchange, as their trusted custodial solution, Belshe notes.
“I’m not trying to say that they [Coinbase] are an FTX by any means. [But] they are taking on also kind of that same playbook in addition to being an exchange and a custodian.”
The BitGo CEO suggested that the SEC “could quite likely” reject multiple ETF applications, demanding from applicants to separate their crypto custodian provider from crypto exchanges, as there are “a lot of risks in that entity.”
BlackRock, the world’s largest asset manager who filed for both Bitcoin and Ethereum spot ETFs, selected Coinbase Custody as the custodian for its products. Franklin Templeton has also picked Coinbase Custody for storing the cryptocurrency.
Meanwhile, the SEC shows no signs of decreasing the scrutiny of spot Bitcoin ETFs, saying that applicants are yet to prove they can protect investors from market manipulation. In mid-November 2023, the U.S. financial watchdog delayed a decision on Hashdex’s application to launch a spot Bitcoin ETF in the U.S.