BitGo CEO Mike Belshe has warned that the failure of the U.S. Senate to advance the Clarity Act has left American capital markets exposed to risks created by the growing concentration of exchange, brokerage and custody services within single digital asset firms.
Speaking with The Block at Korea Blockchain Week 2026, Belshe argued that the absence of a defined market structure could allow companies to become one stop shops for digital asset trading and custody without the safeguards traditionally used to separate financial functions.
The Senate voted 49 to 50 against advancing the Clarity Act on September 15, falling short of the 60 votes required for the procedural motion. The bill was designed to establish a comprehensive federal framework for digital assets, but negotiations had stalled over several issues, including stablecoin rules and concerns raised by Democrats about President Donald Trump’s crypto interests.
KEY TAKEAWAYS
- Mike Belshe says combining exchange, brokerage and custody functions could create major concentration risks.
- He identified custody failures and counterparty credit exposure as two key vulnerabilities.
- Belshe compared the potential consequences of a major consolidated platform failure with the 2008 Lehman Brothers collapse.
- The Clarity Act failed to advance in the Senate by a 49 to 50 vote on September 15.
- The SEC and CFTC have since accelerated rulemaking using their existing regulatory authority.
ONE STOP SHOPS CREATE CONCENTRATED RISK
Belshe pointed to the increasing ability of major digital asset companies to operate across several parts of the financial system. He cited Coinbase’s recent addition of a derivatives clearing organization license to its existing exchange and futures commission merchant operations as an example of the broader trend.
According to Belshe, combining these functions creates two major categories of risk. The first is custody risk. Crypto assets can introduce a different custody challenge from traditional securities because certain assets are controlled through private keys. If those keys are lost or compromised, the underlying assets may become inaccessible or irrecoverable.
The second is counterparty credit risk. When trading, brokerage and custody activities are concentrated inside one institution, problems within that institution could potentially affect several parts of the market simultaneously. Belshe argued that traditional financial market structures developed safeguards around these risks, while the digital asset sector is increasingly building large integrated platforms without an equivalent statutory framework.
BELSHE DRAWS A COMPARISON WITH LEHMAN
Belshe compared the concentration risk to the 2008 collapse of Lehman Brothers, while arguing that a failure involving a major market infrastructure provider could have even broader consequences.
“Imagine if that had been the New York Stock Exchange offering those services and the whole New York Stock Exchange went down.”
His argument was that the financial system survived Lehman’s collapse partly because other institutions and market infrastructure remained operational. A failure involving a dominant venue that simultaneously provided several critical services, he suggested, could transmit disruption across a much larger portion of the market.
Belshe therefore views the absence of clear rules governing the separation or management of these functions as a structural concern rather than simply a compliance issue. He also said BitGo can continue operating without the Clarity Act, noting that the company has spent 13 years operating in the digital asset industry. However, he argued that banks and traditional financial institutions may remain more cautious because of concerns about regulatory uncertainty.
REGULATORS MOVE FORWARD AFTER SENATE SETBACK
The Senate’s failure to advance the legislation has not stopped U.S. regulators from developing crypto rules. The SEC and Commodity Futures Trading Commission said shortly after the vote that they intended to use their existing authority to move forward with digital asset rulemaking. SEC Chairman Paul Atkins said the agency would act within its statutory authority, while CFTC Chair Mike Selig indicated that his agency was preparing rules for digital assets.
The SEC has since proposed a framework addressing crypto custody by investment advisers and regulated funds. The proposal would permit conditional self custody and allow state trust companies to serve as custodians for crypto assets, among other changes. The agency has also advanced its Innovation Exemption, while the CFTC has moved ahead with separate crypto asset rulemaking. These actions provide regulatory developments in the absence of a comprehensive market structure law, but agency rules operate differently from legislation passed by Congress. Analysts have pointed out that regulatory approaches can be modified by future administrations or challenged through the courts.
CONCLUSION
Belshe’s warning highlights a central structural question facing the U.S. digital asset market: how should exchange, brokerage and custody functions interact as crypto firms expand across financial services? His comparison with Lehman is an assessment of the potential consequences of concentrated financial infrastructure, rather than evidence that such a collapse is imminent. The concern is that without clear rules governing these interconnected functions, a failure at a major platform could affect more market activities at once.
For now, the Clarity Act remains stalled after its September Senate vote, while the SEC and CFTC continue developing rules under their existing authority. The resulting framework for managing concentration, custody and counterparty risks will therefore depend partly on how those agencies proceed while Congress considers whether to revisit broader market structure legislation.
