The chief executive of crypto custodian BitGo says that the U.S. Securities and Exchange Commission (SEC) will reject another round of spot market Bitcoin (BTC) exchange-traded fund (ETFs) applications.
In a new interview on Bloomberg Television, BitGo CEO Mike Belshe says that the duality of modern crypto firms like Coinbase – which doubles as both a crypto exchange and custodian – will cause the regulatory agency to reject bids for BTC ETFs.
“We’re all excited about the ETF. It’s definitely getting closer. We’re definitely seeing signals in terms of the conversations that the applicants are having with the SEC. BitGo’s working with a bunch of these guys as well so I’m optimistic.
But I think it’s quite likely we have another round of ETF rejections before we get the positive news, and it really comes back down to market structure. Gary Gensler’s made no secret at this point you have to separate exchanges from custody. The CFTC (Commodity Futures Trading Commission) market structure is already this way – you have to separate exchanges from custody [in] the equity’s markets.”
Belshe goes on to note that the SEC will likely request that these services be separated before approving the applications.
“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.’”
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