Bitcoin ETF Regulations Through BitGo’s Lens

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With so much recent focus on “Bitcoin ETFs”, it’s important to understand the current landscape and what may lie ahead. In cryptocurrency news, we’ve heard from BitGo CEO Mike Belshe on his perspectives regarding exchange-traded funds (ETFs) that would track the price of Bitcoin.

Bitcoin, for those unfamiliar, is the most well-known cryptocurrency and has its native blockchain that allows for peer-to-peer digital value transfer. A Bitcoin ETF would allow every-day investors access to Bitcoin’s price movements through their regular brokerage accounts, making participation in cryptocurrency markets much more streamlined.

However, the regulatory road to approval has been a bumpy one. Let’s unpack some of the key issues according to insights from Belshe across several recent interviews.


Separating Exchanges from Custody – An Ongoing Challenge

Bitcoin ETF

In conversations with Bloomberg, Belshe emphasized that the U.S. Securities and Exchange Commission (SEC) remains focused on separating cryptocurrency exchanges from custody functions. This concern stems from potential conflicts of interest and market manipulation risks if the same entity provides both services.

However, as Belshe points out in his typical straight-shooting style, the lines have become increasingly blurred in this evolving industry. Major financial firms backing Bitcoin ETF applications have opted to use Coinbase Custody – bringing the exchange and custodian roles closer together.

While clarifying that Coinbase itself is no FTX, Belshe draws parallels to Sam Bankman-Fried’s past ambitions of consolidating various functions under one roof at his now collapsed exchange. Regulation demands a cleaner separation, but the industry has yet to reach a completely satisfactory solution according to the no-nonsense BitGo CEO.

Bearing With Further Rejections

Bitcoin ETF

Belshe adopts a cautiously optimistic yet realistic view. Approval seems nearer based on constructive SEC discussions, but the regulatory hurdles remain high. He predicts “another round” of ETF denials may yet come before the final green light.

Patience and improvements to market structure will be needed. Don’t forget to check EXEcrypto for the latest Bitcoin news and other top cryptocurrency updates as this story continues to develop.

Focus on Iteration and Progress

So what’s the wise approach amid ongoing challenges? It’s about focusing on iteration and smaller steps of progress. Rather than demanding immediate approval, acceptance of delays allows time to strengthen frameworks in key areas like segregating roles.

Major applications by the likes of Global X, Franklin Templeton, and Hashdex are testing the waters – helping evolve accepted best practices even without a final decision as of now. The SEC is right to move slowly according to Belshe, prioritizing investor protections above all else.

With persistence and compromise, a reasonable solution may come into focus. In the meantime, there remains much potential for the cryptocurrency sector to deliver transparency and oversight exceeding traditional markets, assuming regulations can adequately catch up. Continued cooperation between watchdogs and organizations like Belshe’s BitGo will be important in paving the optimal path forward.

To paraphrase the wise Belshe, the way may remain tough but the destination draws closer. Incremental developments, open-minded problem solving, and care for stakeholders on all sides offer the most promising approach amid an understandably cautious regulatory environment.

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