- The SEC continues to reject Bitcoin ETF applications due to concerns about potential market manipulation, according to BitGo CEO Mike Belshe.
- Belshe believes the SEC wants to see custody and exchanges separate, so exchanges can’t move prices in their favor. This could address manipulation concerns.
- If custody and exchanges are separated, Belshe expects the SEC will become more open to approving a Bitcoin ETF. However, the SEC will likely want to see the custody model operate successfully over time first.
BitGo CEO Mike Belshe recently said that the SEC could continue rejecting Bitcoin ETF applications until exchanges and custody separate out. This comes after the SEC has rejected over 20 Bitcoin ETF applications so far.
Belshe’s Comments
In an interview, Belshe stated that the SEC still has concerns over potential market manipulation in the Bitcoin market. He believes the SEC wants to see exchanges not control custody as a way to limit manipulation.
Belshe explained that exchanges act as custodians today, executing trades and holding assets. He thinks the SEC wants to see separation between the exchange function and the custody function. This would prevent exchanges from moving prices in their favor.
Once there is separation of custody and exchange, Belshe expects the SEC will become more comfortable approving a Bitcoin ETF. However, he cautioned that the SEC wants to see this custody model work successfully over some time before feeling confident about a Bitcoin ETF.
Reaction
Many in the crypto industry reacted positively to Belshe’s comments. They agree the SEC is looking for custody and exchange separation before approving a Bitcoin ETF.
Some noted that this process is already underway. Regulated crypto custody providers like Anchorage, BitGo, and Coinbase are independent from exchanges. Over time, their proven track records could help pave the way for a Bitcoin ETF.
Others are less optimistic. They point out the SEC has been reluctant to approve crypto ETFs even for assets like Bitcoin futures that trade on regulated exchanges. The SEC may continue moving the goalposts, regardless of custody and exchange separation.
Overall, Belshe’s view that the SEC wants to see custody and exchange separation before approving a Bitcoin ETF is gaining traction. However, there is debate around whether the SEC will actually follow through on a Bitcoin ETF even if this condition is met. The coming years will determine if Belshe’s prediction comes true.
Conclusion
Mike Belshe believes the SEC will keep rejecting Bitcoin ETFs until exchanges no longer control custody. Separating custody and exchange could address SEC concerns over potential manipulation. However, some are doubtful whether the SEC will approve a Bitcoin ETF even with custody and exchange separation. Ultimately, the crypto industry hopes Belshe’s prediction proves accurate, as a Bitcoin ETF would represent a major milestone for mainstream adoption.
