Bitcoin News Today: SEC Halts Bitwise Crypto ETF Launch Hours After Approval Citing Rule 431(e)

The U.S. Securities and Exchange Commission (SEC) has sparked regulatory uncertainty by halting the launch of Bitwise Asset Management’s crypto index fund ETF just hours after initially approving it. The ETF, which tracks a basket of cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), and XRP, was suspended under Rule 431(e) of the Securities Act, which allows the agency to pause decisions for further review. The move has drawn scrutiny over the SEC’s regulatory approach to crypto products and its inconsistent application of oversight standards [1].

The Bitwise 10 Crypto Index Fund, which had been approved on July 16, 2025, is designed to hold the 10 largest cryptocurrencies by market capitalization. Bitcoin accounts for 78.72% of the fund’s allocation, followed by Ethereum at 11.10% and XRP at 4.97%. The ETF also includes Solana (SOL), Polkadot (DOT), and others, with the portfolio rebalanced monthly to align with the index. Coinbase Custody secures the crypto assets, while BNY Mellon manages cash and serves as the fund administrator. Despite these structural details, the SEC’s reversal has left the product in limbo, delaying its potential listing on a national exchange and limiting accessibility for retail and institutional investors [1].

The regulatory pause mirrors a similar action against Grayscale’s Digital Large Cap Fund, which was also approved and then halted for further review. Both funds hold Bitcoin, Ethereum, and Solana, highlighting a pattern of scrutiny despite meeting standard approval criteria. Analysts suggest internal divisions within the SEC may be influencing these decisions, with concerns about crypto exposure and political dynamics potentially playing a role. The agency’s inconsistent messaging—rapidly granting and rescinding approvals—has raised questions about its capacity to balance innovation with investor protection [1].

The broader crypto ETF landscape remains in flux as the SEC reviews additional proposals. These include funds tracking tokens like Solana and Dogecoin (DOGE), with delays indicating a cautious stance toward normalizing such products. Market participants now face heightened uncertainty, as the agency’s procedural interventions—such as granting and rescinding approvals—highlight the need for a more transparent regulatory framework. Without clear guidance, investors may redirect capital to jurisdictions with more predictable rules, further complicating the U.S. market’s ability to compete [1].

The incident underscores the SEC’s dual role as both a market actor and regulator. While the agency has historically opposed spot crypto ETFs, its rapid reversal of Bitwise’s approval suggests a lack of policy coherence. The pause reinforces perceptions of a two-tiered system, where institutional-grade products face less scrutiny than retail-focused offerings. As the SEC continues its review, the industry awaits a framework that addresses regulatory concerns without stifling innovation [1].

Source: [1] [title: SEC Halts Bitwise's Crypto ETF Conversion Hours After Approval Citing Rule 12d1-2 Scrutiny] [url: https://www.ainvest.com/news/sec-halts-bitwise-crypto-etf-conversion-hours-approval-citing-rule-12d1-2-scrutiny-2507/]