Key Points:
- Concerns over SEC approval due to Coinbase’s dual role.
- BitGo CEO emphasizes the need to address market structure concerns.
- Advocacy for custodians like BitGo to facilitate separation for SEC approval.
Across the global landscape of asset managers, there is a palpable eagerness for the approval of spot Bitcoin ETFs, with the potential to inject substantial capital into the crypto industry. While the outlook for these ETFs is promising, concerns have emerged, suggesting that analysts may have overlooked certain risks.
Mike Belshe, CEO of BitGo, has voiced reservations regarding the likelihood of the US Securities and Exchange Commission (SEC) approving spot Bitcoin ETF applications. His concern centers on Coinbase’s integration as both an exchange and custodian, raising the possibility of the risks associated with this multifaceted role not being fully comprehended, which could result in further rejections.
In a recent interview with Bloomberg, Belshe shared insights into the state of Bitcoin ETF applications and the challenges they face. Despite positive conversations between applicants and the SEC, Belshe believes that another round of rejections may be necessary to address concerns related to market structure. He references SEC Chairman Gary Gensler’s emphasis on separating exchanges from custody, drawing parallels with the functioning of the equity market. Belshe also points out Coinbase’s role as an exchange, custodian, and broker-dealer, emphasizing the potential risks that may not be fully understood.
Belshe’s concerns stem from Coinbase’s integration of multiple functions within its platform. While clarifying that Coinbase is not on the same level as the now-bankrupt crypto exchange FTX, Belshe suggests they might be employing a “similar playbook.” He proposes that the SEC may mandate a complete separation of these functions before approving a Bitcoin ETF.
Highlighting the challenges posed by Coinbase’s integration, Belshe underscores that viable solutions exist. He points to custodians like BitGo, specializing in custody services without engaging in exchange or trading activities. Utilizing custodians such as BitGo, Belshe believes, could address the need for separation between exchanges and custody, potentially facilitating SEC approval of Bitcoin spot ETFs.
In the ongoing excitement surrounding Bitcoin spot ETFs, BitGo CEO Mike Belshe’s concerns about Coinbase’s integration as both an exchange and custodian have added a layer of complexity to the discourse. At the time of writing, Bitcoin, the leading cryptocurrency in trading volume, is valued at $36,100, reflecting a 1% retracement in the past 24 hours and a decline of over 2% in the past seven days. Belshe speculates that the SEC may withhold approval of Bitcoin ETF applications until Coinbase’s functions are fully separated, contributing to the ongoing complexity of discussions surrounding Coinbase’s role in Bitcoin spot ETFs.
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Disclaimer: Please note that the viewpoints and perspectives expressed by the author, as well as any individuals referenced in this article, are intended solely for informational purposes. They should not be construed as financial or investment advice. It’s important to acknowledge that investing in or trading cryptoassets carries inherent financial risks.
