The Road to Bitcoin ETF Approval: Challenges and Solutions by BitGo’s Mike Belshe

The Road to Bitcoin ETF Approval: Challenges and Solutions by BitGo’s Mike Belshe

Mike Belshe, the Co-founder and CEO of BitGo, recently spoke with Bloomberg Crypto, sharing his insights on the current state and future prospects of Bitcoin Exchange-Traded Funds (ETFs) and the importance of a clear separation between custodians and exchanges in the cryptocurrency market.

Bitcoin ETFs: A Path of Challenges and Optimism

Belshe expressed a cautiously optimistic view regarding the approval of Bitcoin ETFs. While he believes that the crypto community is inching closer to this goal, he also anticipates more rejections before any positive development. His optimism is fueled by the ongoing dialogues between ETF applicants and the SEC, with BitGo actively involved in these discussions. However, Belshe emphasizes the likelihood of additional setbacks due to existing market structures.

SEC Chair Gary Gensler’s Approach and the Need for Separation

Discussing SEC Chair Gary Gensler’s stance on cryptocurrencies, Belshe highlighted the necessity to distinguish between exchanges and custodians. He drew parallels to existing structures in equity and CFTC markets, underscoring the importance of this separation for the integrity and security of the crypto market.

Coinbase: A Risky Proposition?

Belshe raised concerns about Coinbase operating both as a custodian and an exchange. He pointed out that this dual role could pose risks to investors, a sentiment that may resonate with the SEC’s current regulatory approach. The SEC’s potential insistence on a clear distinction between custody and exchange services, especially for ETF applicants using Coinbase as a custodial partner, signifies a pressing need for clarity and separation in the industry.

BitGo: Filling the Void with a Focused Approach

Addressing the void left by entities like Coinbase, Belshe suggested BitGo as a viable alternative. Unlike Coinbase, BitGo exclusively focuses on custodial services without engaging in trading or exchange operations. This specialization, according to Belshe, positions BitGo to effectively mitigate the risks associated with entities that combine custodial and exchange services, thereby enhancing investor protection and market security.

In summary, Mike Belshe’s discussion with Bloomberg Crypto sheds light on the complexities and challenges in the crypto market, particularly concerning Bitcoin ETFs and the critical need for a clear operational separation between custodians and exchanges. His insights underscore BitGo’s potential role in providing a more secure and focused approach to custodianship in the evolving cryptocurrency landscape.

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