XRP News Today: SEC Approves Bitwise Crypto ETF But Pauses Activation Amid Legal Limbo Despite 85/15 Rule Compliance

The U.S. Securities and Exchange Commission (SEC) has granted approval for Bitwise to reclassify its Crypto Index Fund into a regulated exchange-traded fund (ETF), a move that could expand institutional and retail access to a diversified portfolio of cryptocurrencies. However, the ETF’s activation has been abruptly paused under Rule 431(e) of the Securities Act, leaving the product in a legal limbo despite regulatory clearance. The decision has sparked debate over the SEC’s inconsistent application of its own guidelines and raised questions about the agency’s stance on broader crypto market access.

The Bitwise ETF, which is structured to mirror a basket of cryptocurrencies, allocates 78.72% of its assets to Bitcoin, 11.10% to Ethereum, and 4.97% to XRP, with the remainder distributed among altcoins such as Solana, Cardano, and Litecoin. This composition adheres to the SEC’s 85/15 rule, which mandates that at least 85% of an ETF’s holdings must be in cryptocurrencies already approved for exchange-traded products—primarily Bitcoin and Ethereum. The remaining 15% can include assets like XRP and Solana, which are not individually approved but are permitted in diversified funds. The ETF will be rebalanced monthly, aligning it with traditional stock ETF mechanisms.

Industry experts have criticized the SEC’s decision to delay the ETF’s launch, arguing that the approval and subsequent pause contradict each other. Nate Geraci, a senior market analyst, highlighted the discrepancy on X, stating that the delay “undermines investor access to diversified crypto exposure” and that similar products, such as Grayscale’s Digital Large Cap Fund, should be treated consistently. The regulatory uncertainty has added volatility to the crypto market, where demand for altcoins is surging even without institutional-grade products. Over the past month, Bitcoin’s market dominance has declined from 65% to 60%, while altcoins like Ethereum, XRP, and Cardano have seen double-digit gains.

Analysts attribute the shift in investor sentiment to a broader reallocation of capital toward high-potential altcoins, particularly those tied to Layer-1 blockchain protocols. Kyle Chassé, a crypto strategist, noted that the Altcoin Season Index—a gauge of market dynamics—has risen from 35 to 50 in recent weeks, signaling a gradual tilt toward alternative cryptocurrencies. While the index has not yet reached a “full-blown altseason,” the ETF’s eventual approval could accelerate this trend by providing a regulated vehicle for exposure to altcoins like XRP and Solana.

Currently, the Bitwise ETF is only available over-the-counter, limiting its accessibility to a broader audience. If the SEC lifts its regulatory stay, the fund could be listed on a national exchange, enabling seamless trading for both retail and institutional investors. Until then, the product remains in a unique position: officially approved but functionally inactive. The delay has underscored the SEC’s complex relationship with crypto assets, balancing innovation with regulatory caution. For now, the market continues to evolve organically, with altcoins gaining traction even in the absence of institutional tools.

The outcome of the regulatory standoff could set a precedent for future crypto ETFs. A resolution in favor of Bitwise would signal the SEC’s openness to diversified crypto exposure, while a prolonged delay might reinforce skepticism about the agency’s ability to adapt to technological advancements. Investors and market participants will closely watch whether the SEC’s actions align with its stated goal of fostering innovation in financial markets.