BitGo warns U.S. market structure risk rises after Clarity Act stalls

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BitGo warns on US market risk

Highlights

BitGo CEO Mike Belshe warns U.S. market structure risk has increased after the Clarity Act failed to advance in the Senate on Sept. 15.
Belshe highlights that digital asset firms combining exchange, custody, and brokerage functions, such as Coinbase, concentrate custody and credit risk, risking systemic failures.
He argues that lack of legal clarity raises the risk of a crisis akin to or worse than Lehman Brothers’ 2008 collapse if a central market venue fails.

Senate setback sharpens custody concerns

As reported by The Block, Belshe says BitGo supported the Clarity Act and wants it passed after the U.S. Senate rejected a motion to proceed on Sept. 15, falling short of the 60 votes needed to move the bill forward.

Speaking at Korea Blockchain Week 2026, he says digital asset firms are building one-stop shops that combine trading, brokerage and custody without the market structure needed to contain risk. He points to Coinbase, which recently receives a derivatives clearing organization license in addition to an existing futures commission merchant license and its exchange operations.

Belshe says the two main vulnerabilities are custody risk and counterparty credit risk. In his view, an exchange that also holds client assets creates a concentrated point of failure, especially in digital assets where losing private keys can mean a permanent loss of funds.

Potential fallout for U.S. capital markets

Belshe argues that as more financial activity goes digital, firms that combine these functions are becoming the core of the market rather than a peripheral service provider. He says a breakdown at such a firm would not remain isolated and could pull down broader market activity.

He compares that scenario to the 2008 collapse of Lehman Brothers, but says the consequences could be worse if the failure involves a central market venue rather than a standalone broker-dealer. His broader argument is that the absence of legal clarity leaves no formal market structure to mitigate that concentration risk.

Belshe adds that BitGo can continue operating without the legislation, citing the company’s 13 years in crypto custody. He says banks and other traditional financial groups, which he views as strong potential competitors, are likely to move more slowly because they remain concerned about regulatory pressure, including a possible return of Operation Chokepoint 2.0.

On digital currencies for AI agents, Belshe says he would not rule out stablecoins or other digital money over time, but believes that use case remains further away. He says humans are likely to remain in control of AI systems for much longer, with interfaces still anchored to the dollar and other existing currencies.

Absa’s launch of regulated digital-asset custody in South Africa highlighted how traditional banks are moving into secure storage for institutional crypto clients as demand grows. Our earlier coverage noted that the bank received local regulatory approval and initially supports assets such as Bitcoin, Ethereum and USDC, with plans to expand to more tokens and markets over time. The move underscored how custody is becoming a core battleground between banks and crypto-native providers as oversight frameworks develop.

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