Bitcoin ETF approval may face more obstacles

recent Interview In an interview with Bloomberg TV, BitGo CEO Mike Belshe expressed caution about the approval of spot.

Belshe on potential approval Bitcoin ETF That, along with a dose of realism, suggests the path to approval may be met with more obstacles.

He said he is optimistic, but despite positive progress in discussions between ETF applicants and the SEC, the likelihood of further rejections is high.

Market structure issues

The main concerns Belshe highlighted revolve around market structure issues, specifically the SEC’s insistence on separating trading and custodial roles. This issue is controversial in various applications, especially when it comes to Coinbase Custody.

Belshe noted that the SEC’s focus on market structure is not unprecedented, citing the CFTC market structure and the existing separation of exchanges from regulation in other markets such as the stock market. He also suggested that aligning with this separation model would benefit the crypto market.

According to Belshe:

“Gary Gensler made no secret of the fact that you have to separate trading from regulation.”

Potential rejections of ETF applications could hinge on the SEC’s concerns that exchange and regulatory functions are not adequately separated. Belshe specifically points to the custodial partners chosen by most ETF applicants.

Belshe believes the SEC will require a complete separation of these functions before approving an application.

Market optimism

Analyst estimates 90% chance The ETF is slated for approval in January 2024, but Belshe’s comments suggest rejection remains a strong possibility.

SEC ETF applications have been rejected in history , raising concerns about potential market manipulation and inadequate customer protection. However, the applicant argued that the regulator based its approval of a Bitcoin futures ETF on the grounds that its concerns were unfounded.

BitGo’s CEO also compared Coinbase’s approach to the failed strategy of its bankrupt competitor FTX. Belshe cited the centralized regulatory framework championed by Sam Bankman-Fried in Washington, D.C., which was called into question following the collapse of FTX.

Anticipation for a Bitcoin spot ETF has been a driving force behind the recent rally in Bitcoin prices, and the crypto community is closely watching the SEC’s decision.

Bitcoin is up about 45% since 2017 BlackRock An ETF application has been filed and the cryptocurrency is currently trading at $36,450 after reaching a high of $38,000 earlier this week.