The anticipation surrounding the approval of Bitcoin exchange-traded funds (ETFs) has reached a fever pitch. Market participants are eagerly awaiting the U.S. Securities and Exchange Commission’s (SEC) decision.
A mere hint of progress in ETF approvals can send shockwaves throughout the crypto sector. As seen in a recent incident, when Bitcoin’s price skyrocketed after a rumor suggested that BlackRock’s ETF had gained approval.
On the flip side, it has become obvious that if the SEC decides to reject these ETF applications the price of Bitcoin will have a negative impact. The market’s vulnerability to swift price fluctuations based on approval rumors underscores how important this ETF saga is.
What could be the reason for rejection?
Recently, in an interview, BitGo CEO Mike Belshe expressed skepticism about the SEC’s stance on spot Bitcoin exchange-traded fund (ETF) applications in hand. He says there are specific concerns despite industry-wide optimism.
Belshe said that it is “quite likely” that the SEC could reject these applications. He highlighted a specific concern regarding the separation of exchanges and custody.
I think that the SEC could quite likely come back and say: ‘Nope, you’ve got to separate out those things fully before we move forward
BitGo CEO, Mike Belshe
Coinbase was identified as a potential stumbling block by Belshe in the applications. According to Belshe, the exchange is listed as a custody partner for the ETFs, which is a point of concern.
He predicted that the SEC can a full separation of exchanges and custody before moving forward with the approval process.
There are a lot of risks in that entity Coinbase that are not understood
This cautionary perspective comes at a very interesting point of this ETF saga. Several ETF analysts have estimated a 90% probability of approval in January.
However, the SEC has a history of rejecting ETF applications. The regulatory body has previously cited worries about market manipulation and insufficient customer protection.
BlackRock is one of the notable contenders in the ETF race which filed its application for a spot Bitcoin ETF back in June. As per by TradingView data, the price of Bitcoin has rallied to a recent high of $36,200, huge 45% rally.