Crypto’s market structure is still too fragile

Episode 14 of Season 6 of The Scoop was recorded with The Block's Frank Chaparro and BitGo Co-Founder & CEO Mike Belshe.

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On this episode of The Scoop, The Block's podcast, host Frank Chaparro speaks with Mike Belshe, co-founder and CEO of BitGo, one of the crypto industry's largest digital-asset custody providers, about why he believes the market structure underpinning crypto trading remains fragile despite years of institutional inflows.

Outline

00:00 BitGo Background
05:15 Institutional Crypto Custodians
10:41 New Market Participants
14:36 Market Structure
24:09 Bullish Catalysts
32:08 Crypto Robustness
41:58 Closing Thoughts

Belshe traces the rapid growth of the custody business as more institutional investors, exchanges, and asset managers have sought regulated, insured ways to hold digital assets, a trend accelerated by the launch of spot bitcoin ETFs earlier in the year, which brought a fresh wave of demand for secure custodial infrastructure. He discusses the competitive landscape among custodians and new entrants racing to serve that institutional demand, and explains why he thinks crypto's trading infrastructure, spread across many disconnected exchanges and venues with inconsistent settlement practices, still lacks the kind of unified market plumbing that traditional securities markets rely on.

Belshe lays out his thinking on what it would take to make that infrastructure more resilient, including the case for a shared order book or settlement layer that would let assets move between venues without the counterparty risk that has repeatedly burned traders and institutions during past market stress events.

The conversation also touches on the catalysts Belshe sees as bullish for the industry's next stage of maturation, from growing regulatory clarity in certain jurisdictions to the entrance of traditional financial firms building products on top of custodial infrastructure like BitGo's. Drawing on BitGo's role as one of the earliest players in institutional crypto custody, Belshe offers a candid assessment of how far the market has come since the exchange collapses and hacks that defined crypto's earlier years, while cautioning that meaningful structural work remains before the industry's trading and settlement systems can be considered genuinely robust at scale, a theme that runs throughout this discussion with The Block.

Belshe also addresses how custodians are adapting their risk and compliance practices to satisfy institutional clients accustomed to the safeguards of traditional prime brokerage, and he explains why he sees custody, rather than trading venues themselves, as the foundation on which the rest of crypto's institutional market structure will ultimately need to be built.