The CEO of crypto custodian BitGo says the US Securities and Exchange Commission (SEC) will reject a new round of applications for Bitcoin (BTC) exchange-traded funds (ETFs).
In a new interview on Bloomberg Television, BitGo CEO Mike Belshe says the duality of modern crypto companies like Coinbase – which functions as both a crypto exchange and a custodian – will lead to the regulator rejecting bids for BTC ETFs.
“We are all excited about the ETF. It’s definitely getting closer. We certainly see signals in the conversations that applicants are having with the SEC. BitGo is also working with some of these guys, so I’m optimistic.
But I think it’s very likely we’ll get another round of ETF rejections before we get any positive news, and it really comes down to market structure. Gary Gensler has made no secret of the need to separate exchanges and custody at this point. The CFTC (Commodity Futures Trading Commission) market structure is already like this: you have to separate exchanges from custody [in] the stock markets.”
Belshe further notes that the SEC will likely request that these services be separated before approving the applications.
“Many of these applications are managed by Coinbase. Coinbase, while I’m not trying to say they are an FTX by any means, they are also kind of adopting the same playbook. In addition to being an exchange and custodian, they recently received approval from an FCM (Futures Commission Merchant), of course they became a broker-dealer.
What this means [is] There’s a lot of risks in that entity that aren’t fully understood, and I think the SEC could very likely come back and say, ‘No, you need to completely separate these things before we move forward.’ ”
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