Ethereum News Today: SEC Halts Altcoin ETF Approvals Amid Market Manipulation and XRP Legal Concerns

The U.S. Securities and Exchange Commission (SEC) has issued a stay order halting the approval of new altcoin exchange-traded funds (ETFs) following initial green lights, including Bitwise’s 10 Crypto Index Fund (BITW) and Grayscale’s Digital Large Cap Fund. Both funds had received conditional approval for conversion into spot ETFs but were abruptly paused by the agency for an internal review. The BITW fund, which includes exposure to Bitcoin, Ethereum, XRP, and other altcoins, was approved on July 22 but suspended hours later, mirroring a similar action against Grayscale’s fund in early July 2025 [1]. The SEC has not publicly disclosed the rationale for the pause, but filings suggest concerns over market manipulation, liquidity risks, and investor protection mechanisms for multi-asset crypto products [3].

The move reflects the SEC’s ongoing efforts to establish comprehensive guidelines for altcoin ETFs, which pose unique regulatory challenges compared to single-asset Bitcoin ETFs. Chair Paul Atkins’ administration has adopted a more crypto-friendly stance but remains cautious about approving products involving multiple altcoins, particularly those with unresolved legal issues like XRP. The inclusion of XRP in both the BITW and Grayscale funds has drawn scrutiny amid the ongoing SEC vs. Ripple legal battle, which recently saw Ripple file a motion to withdraw its cross-appeal [2]. Market participants are awaiting legislative clarity, as the U.S. Senate is expected to pass the Clarity Act alongside the GENIUS Act and Anti-CBDC Act, potentially reshaping the regulatory landscape [1].

Investors and market analysts are divided on the implications. While the pause has delayed the launch of these funds, some view it as a necessary step to ensure robust compliance frameworks. Arthur Hayes, former BitMEX CEO and crypto analyst, has speculated that the delay could disrupt momentum in crypto ETF adoption but predicts a “massive surge” in the sector by year-end if regulatory bottlenecks are resolved [5]. Meanwhile, the altcoin market has shown mixed reactions. Ethereum (ETH) has surged 25% over a week, driven by whale buying activity, though this trend appears decoupled from the ETF developments [7].

The SEC’s actions highlight tensions between fostering innovation and safeguarding market integrity. Critics argue the agency’s inconsistent application of standards—accelerating Bitcoin ETF approvals while stalling altcoin products—risks undermining its credibility. Proponents, however, emphasize the need for rigorous oversight, particularly for products involving lower-market-cap tokens with less-established trading infrastructure. The agency’s final decision on whether to lift the stay, modify requirements, or impose stricter rules will likely shape the trajectory of altcoin ETFs for years to come.

Sources: [1] [The Reasons for the SEC's Crypto ETF Stay Order Explained](https://coinedition.com/why-sec-is-staying-pausing-altcoin-etf-approvals/) [2] [Bitwise ETF Approved by SEC but Paused for Internal Review](https://www.coingabbar.com/en/crypto-currency-news/bitwise-etf-approved-by-sec-but-paused-for-internal-review?srsltid=AfmBOoplvn1rsIaO4lPRH8AEEk5QOS5ufx9xYNlwrjs-WaeT5zS7J7yJ) [3] [The SEC Unexpectedly Halts the Conversion of Bitwise's 10 Crypto Index Fund into a Spot ETF](https://www.binance.com/en/square/post/273157****7137) [5] [Arthur Hayes Predicts Massive Crypto Surge by Year-End](https://www.binance.com/en/square/post/273149****0889) [7] [Why Ethereum Is Surging: Expert Forecasts, Whale Buying](https://yellow.com/research/why-ethereum-is-surging-expert-forecasts-whale-buying-and-the-future-of-eth-in-2025)