In a latest interview with Bloomberg TV, BitGo CEO Mike Belshe expressed a cautious outlook on the approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. SEC.

Belshe’s optimism relating to the potential approval of a spot Bitcoin ETF was accompanied by a dose of realism, indicating that the trail to approval would possibly encounter further hurdles.

He mentioned he’s optimistic, however the chance of additional rejections is excessive regardless of optimistic developments in discussions between ETF candidates and the SEC.

Market construction points

The important thing concern highlighted by Belshe revolves round market construction points, particularly the SEC’s insistence on the separation of change and custody roles. This concern has been contentious in numerous functions, notably these involving Coinbase custody.

Belshe famous that the SEC’s emphasis on market construction is just not unprecedented, citing the prevailing separation of exchanges from custody in different markets just like the CFTC market construction and equities markets. He additionally recommended aligning with this separation mannequin would profit the crypto market.

Based on Belshe:

“Gary Gensler’s made no secret about this level, you must separate exchanges from custody.”

The potential rejection of ETF functions might hinge on the SEC’s concern that exchanges and custody features usually are not adequately separated. Belshe particularly identified dangers related to Coinbase, a selected custody accomplice for many ETF candidates.

Belshe believes the SEC will demand a whole separation of those features earlier than approving the functions.

Market optimism

Analysts estimated a 90% likelihood of ETF approval in January 2024, however Belshe’s remarks point out rejection stays a definite risk.

The SEC has traditionally rejected ETF functions, citing issues about potential market manipulation and inadequate buyer safety. Nonetheless, the candidates have argued that the regulator’s issues are unfounded primarily based on its approval of Bitcoin futures ETFs.

BitGo’s CEO additionally drew parallels between Coinbase’s strategy and the unsuccessful technique of its bankrupt competitor, FTX. Belshe referenced Sam Bankman-Fried’s advocacy in Washington, D.C., for a centralized regulatory framework, a mannequin that has confronted skepticism following FTX’s collapse.

The anticipation for a spot Bitcoin ETF has been a driving pressure behind latest Bitcoin value rallies, with the crypto neighborhood intently monitoring the SEC’s selections.

Bitcoin is up roughly 45% since BlackRock filed its ETF utility and is at present buying and selling at $36,450 after reaching a excessive of $38,000 earlier within the week.