- The SEC suspended Bitwise’s ETF approval the same day it was granted under Rule 431, placing it under full Commission review.
- The fund tracks the ten largest crypto assets, with 90% exposure to Bitcoin and Ethereum, aiming for NYSE Arca listing.
- Analysts suggest the SEC is stalling to establish a consistent ETF framework for digital assets before allowing broader approvals.
The U.S. Securities and Exchange Commission halted the approval of Bitwise’s 10 Crypto Index Fund ETF just hours after it was granted. The fund had received initial clearance from the Division of Trading and Markets on July 22, allowing it to list shares on NYSE Arca. However, a same-day notice from the SEC’s Office of the Secretary triggered a full Commission review under Rule 431. This action automatically suspended the prior approval.
The ETF was set to convert from an over-the-counter product into a regulated fund. It tracks the ten largest digital assets by market cap, excluding stablecoins. The fund’s portfolio holds nearly 90% of its value in Bitcoin and Ethereum. Other assets include Solana, XRP, and Cardano. The decision to pause came without a clear explanation, leaving its trading prospects uncertain.
Similar Action Taken Against Grayscale’s GDLC ETF
Earlier this month, the SEC took similar action on Grayscale’s Digital Large Cap Fund. After staff-level approval on July 1, the Commission issued a stay the following day, also citing Rule 431. The ETF includes a multi-asset portfolio with major tokens like Bitcoin and Ethereum. Grayscale later warned that these delays may harm investors due to uncertainty in access and pricing.
Industry analysts believe the SEC might be slowing approvals to finalize a broader digital asset framework. Bloomberg’s James Seyffart noted that the Commission may be working on a general standard for what digital assets qualify for ETF inclusion. Additionally, internal opposition, including from Commissioner Caroline Crenshaw, may be influencing these stays.
Pending Decisions on Complex ETF Proposals Add Pressure
The SEC is also reviewing Bitwise’s separate proposal to allow Ethereum staking within an ETF. That application has been opened for public comment, with concerns raised over whether staking rewards pose risks incompatible with traditional ETFs. The pause on the BITW conversion adds to growing pressure on the agency to clarify its position on crypto investment products.
