Mike Belshe, CEO of BitGo, predicts further challenges for the approval of spot Bitcoin ETFs in the United States. His insights, shared during a Bloomberg interview, highlight unresolved market structure issues as a significant barrier. Despite some optimism in the crypto market about the eventual approval of these ETFs, Belshe’s outlook suggests a different scenario. The U.S. Securities and Exchange Commission (SEC) continues to closely scrutinize these applications, emphasizing investor protection from market manipulation.
The collapse of FTX and the subsequent legal troubles of its founder, Sam Bankman-Fried, have cast a long shadow over the crypto industry. Bankman-Fried’s attempt to influence U.S. crypto regulations did not yield the desired results.
Now, with a potential 115-year sentence looming over him for fraud and misappropriation charges, the industry faces increased skepticism. This skepticism extends to companies like Coinbase Custody, used by many as a custodial solution for their ETF applications. Belshe notes parallels between FTX’s strategies and those employed by Coinbase, albeit clarifying that Coinbase is not being likened to FTX’s malpractices.
Significantly, major financial institutions are not immune to this scrutiny. BlackRock and Franklin Templeton, among others, have chosen Coinbase Custody for their cryptocurrency storage. This choice highlights a trend in the industry where the lines between exchanges and custodians are increasingly blurred. The SEC’s concern centers around the potential risks posed by this lack of separation, which might lead to the rejection of multiple ETF applications.
The SEC’s unwavering vigilance is evident in its recent actions. For instance, the decision on Hashdex’s application for a spot Bitcoin ETF in the U.S. was postponed in mid-November 2023. This move underscores the regulator’s commitment to ensuring robust investor protection measures are in place. Consequently, the industry is left to navigate these regulatory challenges, which show no signs of abating.
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