BitGo chief executive Mike Belshe is pessimistic about the US Securities and Exchange Commission approving the pending Bitcoin Exchange Traded Fund (ETF) application, alleging market structure challenges. The executive revealed during his recent interview that Bitcoiners should expect good and bad news regarding the approval of dozens of bids for the spot Bitcoin ETF.
BitGo’s chief executive admitted the excitement surrounding the ETF approval by pointing out the existing signals from positive conversations between the SEC and various applicants. Although noncommittal, Belshe indirectly referred to the meeting between SEC and Grayscale Bitcoin Trust (GBTC) representatives, thereby hinting at the progress realized.
Belshe considers the bad news to arise from the likelihood of Bitcoiners witnessing another round of ETF rejections prior to the receipt of the positive news. He attributed the origin of potential delays to concerns regarding the market structure.
Replicate Equities Markets in Bitcoin ETF Applications
Belshe iterated that the SEC is likely to evoke market structure issues, given its stance on the need to separate exchange and custody roles. Such has become a contentious issue unresolved in several applications that identify Coinbase custody.
Belshe informed Bloomberg News in an interview held on Thursday, November 16, that the market structure issue is bound to emerge. He emphasized that the applicants should separate exchanges distinctively from the custody services.
The executive illustrated that the SEC would likely direct the applicants to replicate the equities markets to avoid potential conflicts and commingling of functions.
The chief of Palo Alto-headquartered digital asset trust and security company acknowledged the growing anticipation of spot Bitcoin ETF, thereby driving the Bitcoin price rallies. Belshe attributes the crypto community to assume that the SEC is edging closer to approving one of the several bids.
Belshe observed that Thursday marked the end of the period when the Gary Gensler-led securities regulator ought to have hypothetically approved the ETF applications together.
The BitGo CEO demonstrated that, to an extent, SEC would echo his Thursday pronouncement regarding the market structure. He cited the Mid2023 submission by the SEC when filing charges against Coinbase’s failure to avoid commingling of functions.
The securities regulator accused the San Francisco-headquarter crypto exchange of failing to register its clearing house, brokerage, and exchange services separately.
BitGo CEO Evokes FTX Similarly to Warn of Market Structure Issues in Bitcoin ETF Bids Anchored on Coinbase Custody
Belshe drew comparisons between the Brian Armstrong-led Coinbase and now bankrupt rival FTX. He decried that the ex-FTX CEO Sam Bankman-Fried had fifteen months ago crusaded across Washington DC in support of the seven primary points of regulation.
Belshe emphasized grounds for him to take over all functions to realize efficiency. His assertions in support of handling all functions turned fraudulent; no efficiency was realized as he now faces a lengthy sentence for defrauding clients’ deposits.
Belshe admitted that the thought process has changed post the FTX collapse. He added that the majority of Bitcoin ETF applications are anchored on Coinbase custody. He clarified that his pronouncements do not in any way label the largest crypto exchange in the US as FTX. Nonetheless, they are assuming a similar playbook.
Long Wait for Bitcoin ETF Approval Labeled a Lifetime
Former head of BlackRock Steven Schoenfield, now heading MarketVector Indexes, indicated in a London conference in October that a three to six-month wait for the Bitcoin ETF approval seems a lifetime. However, he echoed Belshe’s observations that the recent invitation extended by SEC for public comments is a positive signal of engagement and not outright rejections.
The market is beaming with anticipation that the presence of traditional finance giants such as BlackRock would lead the charge, given its impressive track record for securing ETF approvals. Nonetheless, Schoenfield projected that BlackRock would face stiff competition from firms deeply rooted in the crypto ecosystem.
Editorial credit: Backcountry Media / Shutterstock.com