SEC Delays Decision on Bitwise Crypto Index Fund Conversion  

• SEC has postponed its decision on Bitwise’s crypto fund ETF conversion, citing the need for a comprehensive review of associated implications. 
• The objective of such an extension is to mitigate investor protection risks while also considering the efficiency of facilities based on crypto-based ETFs. 
• Bitwise’s crypto index fund mirrors all major Crypto assets based on their market cap and includes Bitcoin, Ethereum, and many others. 

The United States Securities and Exchange Commission has therefore put on hold its verdict on Bitwise’s application to have its crypto index fund transformed into an ETF. The license issuing authority has given March 3, 2025, as the date, on which it will either approve or reject the application or refer to further consideration. 

The extension was however deemed necessary because the SEC requires sufficient time to undertake the assessment of the proposal as well as other contingencies. The statement read, “The Commission finds it appropriate to have a longer period to respond to the proposed rule change to be given adequate time to consider the proposed rule change and the matters arising therefrom.” 

Self-identified exchange NYSE Arca applied Bitwise on November 15, 2024, and thus, the formal consideration process began. This proposal was published in the Federal Register on December 2 and was made open for comments. Nevertheless, there was no comment left up until now. 

Bitwise’s Fund Overview 

The Bitwise 10 Crypto Index Fund was established in 2017 and invests in the first ten cryptocurrencies by market capitalization. The company is valued at $1.4 billion and mostly involves Bitcoin at 75.14% and Ethereum at 16.42%. Others are – Solano, XRP, Cardano, Avalanche, and Polkadot. 

Hunter Horsley, the Bitwise CEO, affirmed that the change would improve offering and investor safeguard with the fund focusing better on Net Asset Value (NAV). 

SEC’s Cautious Approach 

The SEC continues to pay attention to the problems related to the prospects of crypto-based ETFs. It has consistently voiced concerns about such issues as manipulation of markets, liquidity and investors’ protection. For this reason, the period of review is longer than in cases without such problems because the regulator aims to settle all the problems before deciding on this issue. 

They were expected, with Bloomberg ETF analyst James Seyffart suggesting that the SEC’s delay was all part of the plan. He said, “As expected, the SEC has kicked the can further and postponed the decision on the Bitwise Invest filing to transform the Bitwise10 Crypto Index Fund to become an ETF.” 

This is not the first time the SEC has delayed similar decisions. In November 2024, it postponed rulings on Ethereum spot ETFs from Bitwise and Grayscale. Later, it approved the first Bitcoin-Ethereum combination ETFs from Hashdex and Franklin Templeton in December. 

Osprey Funds, another key player, had intended to convert its Bitcoin Trust into an ETF. However, a recent announcement confirmed the termination of its asset acquisition agreement with Bitwise due to regulatory delays.