BitGo CEO Mike Belshe predicts that there will be another round of rejections for spot Bitcoin exchange-traded funds (ETFs) due to unresolved issues.

While the cryptocurrency market is showing signs of a potential approval for a spot Bitcoin ETF in the near future, Mike Belshe believes that the industry should prepare for more rejections from the U.S. Securities and Exchange Commission (SEC).

In an interview with Bloomberg, Belshe, the CEO of a qualified crypto custodian in the U.S., expressed optimism about the eventual approval of Bitcoin ETFs. However, he acknowledged that the market structure remains the main question that needs to be resolved.

Belshe specifically mentioned that Sam Bankman-Fried, the disgraced founder of FTX, had tried to persuade U.S. regulators to adopt his vision of the regulatory framework for the crypto industry. Bankman-Fried’s efforts ultimately failed, leading to his conviction for fraud and misappropriation of FTX customers’ funds.

Despite this, major Wall Street players, such as Coinbase Custody, are following a similar path with their ETF applications. Coinbase Custody, the custodial service of the Coinbase crypto exchange, has been chosen as the trusted custodian by these financial institutions, according to Belshe.

“I’m not trying to say that they [Coinbase] are an FTX by any means. [But] they are taking on also kind of that same playbook in addition to being an exchange and a custodian.”

– Mike Belshe

Belshe suggested that the SEC may reject multiple ETF applications and require applicants to separate their crypto custodian provider from the crypto exchanges due to the risks associated with these entities.

BlackRock, the world’s largest asset manager, has filed for both Bitcoin and Ethereum spot ETFs and has chosen Coinbase Custody as the custodian for its products. Franklin Templeton has also selected Coinbase Custody for storing cryptocurrency.

Meanwhile, the SEC continues to scrutinize spot Bitcoin ETFs, stating that applicants have yet to demonstrate their ability to protect investors from market manipulation. In November 2023, the SEC postponed its decision on Hashdex’s application to launch a spot Bitcoin ETF in the U.S.