Amidst the anticipation among global asset managers for the green light on a spot Bitcoin ETF, concerns that analysts have overlooked are surfacing, despite the potential for these ETFs to attract significant capital and investment into the crypto industry, particularly Bitcoin.Thank you for reading this post, don't forget to subscribe!
Expressing reservations about the likelihood of the US Securities and Exchange Commission (SEC) giving the nod to spot Bitcoin ETF applications due to Coinbase’s integration as both an exchange and custodian is BitGo CEO Mike Belshe.
Belshe has emphasized that the risks linked to Coinbase’s multifaceted role are not comprehensively understood, potentially resulting in further rejections before any positive news emerges.
Further Rejections for Bitcoin ETF?
During a recent interview with Bloomberg, Belshe shared his insights on the challenges faced by Bitcoin ETF applications. While conveying optimism and recognizing the positive interactions between applicants and the SEC, Belshe believes that another round of rejections may be necessary to address market structure concerns.
Belshe underscored SEC Chairman Gary Gensler’s segregation of exchanges from custody, drawing parallels with the operation of equity markets. He also highlighted Coinbase’s role as an exchange, custodian, and broker-dealer, which accentuates risks within the entity that may not be fully grasped.
Belshe’s concerns emanate from Coinbase’s integration of multiple functions within its platform. Although he clarified that Coinbase is not on the same level as the bankrupt crypto exchange FTX and its co-founder Sam Bankman-Fried, Belshe asserts that they are following the “same playbook.”
By collaborating as an exchange, custodian, and broker-dealer, Coinbase presents risks that the cryptocurrency community may not fully comprehend. Belshe suggests that the SEC may need to completely disentangle these operations before giving a thumbs-up to a Bitcoin ETF.
BitGo CEO Advocates Custodian Role in Bitcoin ETF
Underlining the challenges posed by Coinbase’s integration, Belshe stressed that there are viable solutions at hand. He pointed to custodians like BitGo, which specialize in custody services without engaging in exchange or trading activities.
Belshe mentioned that by utilizing custodians such as BitGo, the industry can address the necessity for a clear demarcation between exchanges and custody, potentially smoothing the path for the SEC’s approval of a Bitcoin spot ETF.
Overall, as the fervor for a Bitcoin spot ETF continues to intensify, BitGo CEO Mike Belshe has raised concerns about Coinbase’s dual role as an exchange and custodian.
Belshe believes that unless Coinbase’s operations are completely segregated, the SEC could rebuff Bitcoin ETF applications. As the industry awaits regulatory verdicts, the debate encircling Coinbase’s involvement in the Bitcoin spot ETF introduces an additional layer of complexity to the ongoing discussions.
Lateral price action of BTC on the daily chart. Source: BTCUSDT on tradingview.com
At the time of writing, Bitcoin, the top cryptocurrency in terms of trading volume, is currently priced at $36,100. The price reflects a 1% retracement in the last 24 hours and a drop of over 2% in the last seven days.
Featured image from Shutterstock, chart from tradingview.com