More Bitcoin ETF Rejections ‘Quite Likely,’ BitGo’s Belshe Says

More Bitcoin ETF Rejections ‘Quite Likely,’ BitGo’s Belshe Says

In a recent interview, BitGo CEO Mike Belshe expressed his belief that the U.S. Securities and Exchange Commission (SEC) will likely reject a series of spot bitcoin exchange-traded fund (ETF) applications, despite the industry’s optimism. Belshe suggested that the SEC may reject these applications due to concerns over the integration of exchanges and custody, particularly with Coinbase as the selected custody partner. He stated that there are still risks associated with Coinbase that need to be fully separated before the SEC can move forward. Although some analysts predict a high chance of ETF approval in January, the SEC has consistently raised concerns about market manipulation and customer protection.

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Introduction

In the world of cryptocurrency, the topic of Bitcoin (BTC) exchange-traded funds (ETFs) has generated a lot of buzz and speculation. Many investors and enthusiasts are eagerly awaiting the approval of a BTC ETF, as it has the potential to bring more institutional investors into the market and contribute to the mainstream adoption of Bitcoin. However, despite industry optimism, the U.S. Securities and Exchange Commission (SEC) is still ‘quite likely’ to reject BTC ETF applications, according to Mike Belshe, the CEO of BitGo. In this article, we will explore the reasons for the potential rejection of BTC ETF applications, past ETF rejections, industry optimism surrounding ETF approval, the recent BTC price rally, and conclude with some information about CoinDesk and the author.

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Background

SEC Still ‘Quite Likely’ to Reject BTC ETF Applications

According to Mike Belshe, the CEO of BitGo, it is “quite likely” that the SEC will reject a series of BTC ETF applications. Belshe believes that the SEC might reject these applications on the basis that exchanges and custody are not separated. Coinbase, a popular cryptocurrency exchange, has been selected as a custody partner for several potential ETFs, but Belshe argues that there are risks associated with Coinbase that are not fully understood. He suggests that the SEC may require a complete separation of custody from exchanges before approving any BTC ETF applications.

BitGo’s Belshe Comments

As the CEO of BitGo, a leading provider of institutional-grade cryptocurrency custody and security solutions, Mike Belshe has unique insights into the industry and regulatory landscape. His comments on the potential rejection of BTC ETF applications shed light on the concerns and considerations that the SEC may have in evaluating these applications.

Reasons for Rejection

Exchanges and Custody Not Separated

One of the main reasons for the potential rejection of BTC ETF applications is the lack of separation between exchanges and custody. The SEC may view this as a potential risk, as it could lead to conflicts of interest and compromise the integrity of the ETF. Separating exchanges and custody would ensure that the custody of Bitcoin is handled by a trusted and independent third party, reducing the potential for manipulation and other risks.

Risks Associated with Coinbase

Coinbase, one of the most popular cryptocurrency exchanges, has been selected as a custody partner for several BTC ETF applications. However, Mike Belshe has raised concerns about the risks associated with Coinbase that are not fully understood. These risks may include security vulnerabilities, potential conflicts of interest, and regulatory compliance issues. The SEC may hesitate to approve ETF applications that rely on Coinbase as a custody partner until these risks are adequately addressed.

Past ETF Rejections

SEC’s Concerns over Market Manipulation

The SEC has rejected numerous BTC ETF applications in the past, citing concerns over potential market manipulation. The decentralized nature of Bitcoin and the lack of regulation in the cryptocurrency market have raised red flags for the SEC. The agency is wary of approving ETFs that could potentially expose investors to risks associated with market manipulation.

Lack of Customer Protection

Another reason for past ETF rejections is the perceived lack of customer protection in the cryptocurrency market. The SEC has expressed concerns about the security of investors’ funds and the potential for fraud in the industry. Without sufficient regulatory oversight and investor protections, the SEC may continue to reject BTC ETF applications.

Industry Optimism

Chances of ETF Approval in January

Despite the potential for rejection, there is industry-wide optimism surrounding the approval of a BTC ETF. Several ETF analysts have predicted that the chances of approval in January are around 90%. This optimism is driven by the increasing institutional interest in Bitcoin and the growing recognition of its value as an investment asset. If a BTC ETF is approved, it could open the doors for more institutional investors to enter the market, potentially driving up the price of Bitcoin.

BlackRock’s ETF Application

Fund manager BlackRock filed an application for a spot BTC ETF in June, further fueling industry optimism. Since then, the price of Bitcoin has rallied by 45% to $36,200, according to TradingView data. The filing of a BTC ETF application by a major player like BlackRock demonstrates the growing acceptance and interest in Bitcoin as an investment. If BlackRock’s application is successful, it could set a precedent for the approval of other BTC ETFs.

BTC Price Rally

BTC Price Increase Since ETF Application

Following the filing of BTC ETF applications and the industry’s optimism surrounding their approval, the price of Bitcoin has experienced a significant increase. According to TradingView data, the price of Bitcoin has rallied by 45% since June, reaching $36,200. This price rally is driven by the anticipation of increased institutional investment and mainstream adoption of Bitcoin through ETFs.

Current BTC Price

As of the time of writing, the current price of Bitcoin is $36,419.73, according to the CoinDesk Market Index. While this price is subject to market fluctuations, the recent rally and industry optimism surrounding BTC ETFs have contributed to the overall positive sentiment around Bitcoin’s price.

Conclusion

In conclusion, while there is industry optimism surrounding the approval of BTC ETFs, the SEC is ‘quite likely’ to reject these applications due to concerns about the lack of separation between exchanges and custody, as well as the risks associated with specific custody partners like Coinbase. Past ETF rejections have been driven by concerns over market manipulation and a perceived lack of customer protection. Despite these potential rejections, the chances of ETF approval in January are high, and the filing of applications by major players like BlackRock demonstrates growing acceptance and interest in Bitcoin. The recent rally in Bitcoin’s price further supports the positive sentiment surrounding ETF approval. However, it is important to note that the cryptocurrency market is highly volatile, and investors should exercise caution when making investment decisions.

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Oliver Knight’s Background

Oliver Knight is a CoinDesk reporter based between London and Lisbon. As a seasoned journalist, Oliver has a deep understanding of the cryptocurrency industry and its evolving landscape. With a passion for providing accurate and informative news, Oliver brings a fresh perspective to cryptocurrency reporting.

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