Bitcoin News Today: SEC Shocks Market by Approving, Then Revoking First Diversified Spot Crypto ETF

The U.S. Securities and Exchange Commission (SEC) caused ripples in the cryptocurrency market by approving the Bitwise 10 Crypto Index Fund as a spot exchange-traded fund (ETF) on July 22, only to revoke the decision hours later through a legal stay [1]. The approval, announced via an official agency order, marked the first time a diversified spot crypto ETF received regulatory clearance in the United States. The product, which tracks ten major cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Polkadot (DOT), was positioned as a milestone for institutional and retail access to crypto markets. Bitwise’s $1.7 billion fund, which rebalances monthly, was described as a flagship product in the firm’s portfolio at the time of approval [1].

The sudden reversal left investors and industry participants in confusion. The SEC cited Rule 431 of the Securities Act to justify the stay, stating the order would remain pending until further instructions from the commission [1]. Assistant Secretary Sherry R. Haywood clarified that the pause allowed the agency to review whether the delegated approval aligned with its evolving standards for crypto ETFs. This pattern mirrored recent actions involving Grayscale’s multi-asset crypto fund, where approvals were similarly revoked for full commission review [1]. A legal source criticized the move as “funny business,” highlighting the regulatory uncertainty it created [1].

The agency’s decision to delay other crypto ETF proposals further deepened the market’s unease. Applications for Bitcoin and Ethereum redemption mechanisms, as well as Solana-tracking products, faced indefinite holds. Observers speculated that the SEC aims to finalize a unified framework for digital asset ETFs before allowing broader approvals, particularly for baskets of altcoins or newer tokens [1]. Current regulatory processes, such as the 19b-4 review, extend decision-making timelines by up to 240 days per filing, creating bottlenecks for applicants like Bitwise and Grayscale [1].

The approval’s brief existence and subsequent reversal underscore the SEC’s internal tension between fostering innovation and enforcing traditional regulatory guardrails. While the agency acknowledges the growing demand for crypto investment vehicles, its reluctance to establish clear listing criteria keeps the sector in limbo. The lack of standardized rules means each application is evaluated on a case-by-case basis, prolonging clarity for market participants.

The Bitwise ETF’s initial approval offered a glimpse of potential regulatory acceptance for diversified crypto products, but the abrupt halt reinforced skepticism about the SEC’s ability to balance risk management with market access. Investors and firms now face a dual challenge: navigating an inconsistent approval process while adapting to an evolving legal landscape. The agency’s focus on refining its approach suggests that future decisions may prioritize consistency over speed, though the exact timeline remains unclear.

Source: [1] [title: SEC Shocks Market With Bitwise ETF Approval, Then Sudden Pause] [url: https://www.livebitcoinnews.com/sec-shocks-market-with-bitwise-etf-approval-then-sudden-pause/]