Belshe’s optimism about the potential approval of a spot Bitcoin ETF is accompanied by a certain realism, suggesting that the path to approval could come with additional hurdles.

BitGo CEO Mike Belshe recently expressed caution about the U.S. SEC approving a spot Bitcoin exchange-traded fund (ETF) in an interview with Bloomberg TV.

Belshe’s optimism about the potential approval of a spot bitcoin ETF is accompanied by a dose of realism, suggesting the path to approval could come with additional hurdles.

He said he is optimistic, but despite the positive developments in discussions between ETF applicants and the SEC, the likelihood of further rejections remains high.

Market structure issues

The main concerns Belshe highlighted revolve around market structure issues, specifically the SEC’s insistence on separating the exchange and custodian roles. This issue has been contentious in various applications, especially those involving Coinbase Custody.

Belshe noted that the SEC’s focus on market structure is not unprecedented, citing the CFTC’s market structure and the existing separation of exchanges and custody in other markets such as the stock market. He also suggested that the adoption of such a separation model would benefit the cryptocurrency market.

According to Belshe:

“Gary Gensler made no secret of it, you have to separate trading from regulation.”

Potential rejections of ETF applications could hinge on the SEC’s concerns that the exchange and custody functions are not adequately separated. Belshe specifically pointed to the risks associated with Coinbase, the custody partner of choice for most ETF applicants.

Belshe believes the SEC will require a complete separation of these functions before approving an application.

Market optimism

Analysts estimate a 90% chance of the ETF being approved in January 2024, but Belshe’s comments suggest a rejection remains a strong possibility.

The SEC has historically rejected ETF applications, citing concerns about potential market manipulation and inadequate customer protection. However, the applicant argued that the regulator’s approval of a Bitcoin futures ETF was unfounded.

The BitGo CEO also compared Coinbase’s approach to the unsuccessful strategy of its bankrupt competitor FTX. Belshe mentioned the centralized regulatory framework championed by Sam Bankman-Fried in Washington, D.C., a model that was called into question after the FTX collapse.

Anticipation for a spot Bitcoin ETF has been a driving force behind the recent rally in Bitcoin prices, with the crypto community closely watching the SEC’s decision.

Bitcoin has risen about 45% since BlackRock filed its ETF application and is currently trading at $36,450 after hitting a high of $38,000 earlier this week. #BitGo  #比特币ETF