ETFs and Bitcoin: What Will the SEC Do? BitGo CEO Explains

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• In a recent interview, Mike Belshe, CEO of BitGo, a U.S.-based qualified crypto custodian, expressed optimism that the ultimate outcome for Bitcoin ETFs would be positive.
• BlackRock, the world’s largest asset manager, applied for both Bitcoin and Ethereum spot ETFs, selecting Coinbase Custody as the custodian for its products.
• The SEC continues its determination to thoroughly examine spot Bitcoin ETFs, insisting that applicants must prove their ability to protect investors from market manipulation.

Mike Belshe, CEO of BitGo, a U.S.-based qualified crypto custodian, shared his thoughts on spot Bitcoin ETF applications: What will the SEC do?

Belshe Shares Views on ETFs

While Belshe has seen signs that the market will eventually receive approval for a spot Bitcoin (BTC) exchange-traded fund (ETF), he believes that the U.S. Securities and Exchange Commission (SEC) will likely reject several more applications.

In a recent interview, Belshe, who operates a U.S.-based qualified crypto custodian, expressed optimism that the ultimate outcome for Bitcoin ETFs would be positive. However, he noted that the market structure still appears to be a significant issue that needs to be resolved.

Belshe particularly highlighted how Sam Bankman-Fried, the founder of FTX, tried to follow his own vision of how the regulatory framework for the crypto industry should be before the collapse of FTX. This gamble did not pay off for Bankman-Fried, and he is currently facing a potential 115 years in prison after being found guilty of fraud and embezzlement of customer funds. However, it seems that Wall Street giants are following a similar path regarding ETF applications; they are choosing Coinbase Custody, a custody service of the Coinbase crypto exchange, as a reliable storage solution, says Belshe, continuing:

“I’m not saying they (Coinbase) are trying to be FTX in any way. (But) at the same time, they are taking the same playbook, being both an exchange and a custodian.”

The CEO of BitGo suggests that the SEC might reject a series of ETF applications, ask applicants to separate crypto custody providers from crypto exchanges, and say, “there are many risks in these assets.”

Asset Managers Choose Coinbase

BlackRock, the world’s largest asset manager, applied for both Bitcoin and Ethereum spot ETFs, selecting Coinbase Custody as the custodian for its products. Franklin Templeton also chose Coinbase Custody for storing cryptocurrencies.

Meanwhile, the SEC continues its determination to thoroughly examine spot Bitcoin ETFs, insisting that applicants must prove their ability to protect investors from market manipulation. In mid-November 2023, the U.S. financial watchdog postponed the decision on Hashdex’s application to launch a spot Bitcoin ETF in the U.S.