SEC approves then halts Bitwise $1.68B crypto ETF conversion for full review

The U.S. Securities and Exchange Commission (SEC) initially approved Bitwise Asset Management’s proposal to convert its 10 Crypto Index Fund (BITW) into a spot exchange-traded fund (ETF) on July 22, 2025, only to immediately issue a stay order halting the process for further review [2]. The BITW fund, which holds 90% of its $1.68 billion in assets in Bitcoin and Ethereum, with the remaining 10% split among altcoins like Solana, XRP, and Cardano, aimed to become the first multi-asset crypto index ETF in the U.S. [1]. Its approval would have enabled institutional and retail investors to access diversified crypto exposure through traditional brokerage accounts, a milestone for the industry. However, the SEC’s reversal mirrored its abrupt pause of Grayscale’s Digital Large Cap Fund (GDLC) conversion weeks earlier, raising questions about inconsistent regulatory priorities [3].

The agency’s initial approval cited compliance with the Exchange Act’s requirements for preventing fraudulent practices and protecting investors. Yet, the subsequent stay referenced the need for a “full commission review” of the delegated authority used in the decision [1]. This contradiction has fueled speculation about political influence or internal discord within the SEC. ETF analyst James Seyffart noted the unusual timing, pointing out that the BITW application was not due for a decision until the following week [1]. Scott Johnsson of Van Buren Capital theorized the approval bypassed interference from Commissioner Caroline Crenshaw, a Democrat and crypto ETF critic, while also suggesting the move could delay statutory review timelines [2]. Bloomberg’s Eric Balchunas, meanwhile, proposed the SEC might be stalling to finalize a standardized framework for crypto ETF listings, including asset eligibility and pricing guidelines [3].

The lack of clear SEC rules for multi-asset crypto ETFs remains a central issue. Tokens like XRP and Cardano, included in BITW and GDLC, lack standalone ETFs, complicating the agency’s ability to regulate index funds offering exposure to these assets. Industry insiders argue that until the SEC clarifies asset classifications beyond Bitcoin and Ethereum, it will remain hesitant to approve applications that could face legal or regulatory challenges later [1]. The BITW reversal exemplifies this caution, as the agency seeks to avoid precedents that might undermine future oversight efforts.

For investors, the pause creates uncertainty about access to diversified crypto products, delaying mainstream adoption. Bitwise faces a strategic setback but may appeal the decision or explore alternative market entry strategies. The incident underscores the SEC’s dual role in fostering innovation while mitigating risks—a balance that remains elusive. For now, the BITW remains in regulatory limbo, a testament to the SEC’s evolving approach to crypto assets and its ongoing struggle to harmonize policy with market realities [3].

Sources:

[1] [SEC Approves Bitwise ETF, Then Immediately Reverses](https://www.tradingview.com/news/cryptonews:d0f4c4b66094b:0-sec-approves-bitwise-etf-then-immediately-reverses-decision-hours-later/)

[2] [SEC again flip-flops on approval of crypto ETF conversion](https://www.pionline.com/asset-management/exchange-traded-funds/pi-sec-approves-pauses-bitwise-crypto-etf/)

[3] [SEC Hits Pause After Approving Bitwise Crypto ETF Conversion](https://unchainedcrypto.com/sec-hits-pause-after-approving-bitwise-crypto-etf-conversion/)