XRP News Today: SEC approves then pauses Bitwise's crypto ETF under Rule 431(e) over altcoin concerns.

The U.S. Securities and Exchange Commission (SEC) initially approved Bitwise’s proposal to convert its crypto index fund BITW into a spot exchange-traded fund (ETF) on July 7, 2025, only to reverse the decision hours later for further review. The fund, which holds 90% of its weight in Bitcoin (BTC) and Ethereum (ETH) and the remainder in altcoins like Solana (SOL), XRP, and Cardano (ADA), became the second multi-asset crypto ETF to face a regulatory pause this month, following a similar reversal of Grayscale’s GDLC fund [1]. The SEC cited Rule 431(e), a mechanism allowing the commission to review decisions made under delegated authority, as the rationale for the abrupt halt [2].

The BITW fund, launched in 2017, holds $1.68 billion in assets and rebalances monthly, maintaining a 2.5% expense ratio. Its conversion to a spot ETF would have marked the first U.S. multi-asset crypto index ETF if finalized [3]. However, the SEC’s letter to Bitwise mirrored language used in its pause of Grayscale’s ETF, indicating a pattern of regulatory caution. Sources suggest the hesitation stems from unresolved questions about the treatment of altcoins like XRP and ADA, which lack standalone ETFs and remain under SEC scrutiny for securities law compliance [4].

The reversal has intensified speculation about the SEC’s internal standards for crypto ETFs. While the agency has shown openness to Bitcoin and Ethereum-based products, its approach to multi-asset funds remains inconsistent. For instance, the SEC has simultaneously processed redemption mechanics amendments for Bitcoin/Ethereum ETFs from Franklin Templeton, Fidelity, and Invesco Galaxy, while delaying decisions on funds incorporating altcoins [5]. This duality highlights the regulatory body’s struggle to balance innovation with investor protection in an evolving market.

The BITW case also underscores the political and legal complexities surrounding crypto regulation. Analysts note that the SEC’s actions could reflect broader debates over the agency’s authority to oversee digital assets, particularly as competing frameworks gain traction in Congress. The pause may delay market access for investors seeking diversified crypto exposure, though Bitwise has not yet confirmed whether its management fee will remain at 2.5% post-conversion [6].

The ripple effects extend beyond Bitwise. XRP’s 6% price drop following the news illustrates the market’s sensitivity to regulatory signals, with investors parsing every decision for clues about future policy [7]. Meanwhile, the SEC’s recent review of the Canary Capital SUI ETF and 21Shares’ ONDO token-linked proposal suggests the agency is accelerating its evaluation of emerging crypto asset classes [8].

Critics argue the SEC’s inconsistent application of Rule 431(e) risks stifling innovation, while proponents view the reviews as necessary safeguards against market volatility and potential fraud. With the agency’s docket now including over 20 ETF applications, the BITW saga may set a precedent for how multi-asset crypto products navigate the regulatory landscape.

Sources:

[1] [title1: SEC approves, then instantly pauses Bitwise's ETF conversion] [url1: https://cointelegraph.com/news/sec-pauses-bitwise-crypto-etf-after-approval]

[2] [title2: SEC Hits Pause After Approving Bitwise Crypto ETF Conversion] [url2: https://unchainedcrypto.com/sec-hits-pause-after-approving-bitwise-crypto-etf-conversion/]

[3] [title3: SEC Approves Then Pauses Bitwise's Bid to Convert BITW] [url3: https://www.coindesk.com/policy/2025/07/22/sec-approves-then-pauses-bitwise-s-bid-to-convert-bitw-crypto-index-fund-to-etf]

[4] [title4: SEC Halts Bitwise Crypto ETF Approval Over XRP ADA] [url4: https://www.ainvest.com/news/xrp-news-today-sec-halts-bitwise-crypto-etf-approval-xrp-ada-inclusion-spurring-regulatory-debate-2507/]

[5] [title5: SEC Approves Bitwise ETF, Then Freezes It for Review] [url5: https://www.ccn.com/news/crypto/sec-approves-bitwise-etf-then-freezes-it/]

[6] [title6: SEC Approves, Immediately Pauses Bitwise's Bid to Convert BITW] [url6: https://finance.yahoo.com/news/sec-approves-immediately-pauses-bitwises-215055666.html]

[7] [title7: XRP drops 6% as SEC delays Bitwise crypto ETF] [url7: https://m.economictimes.com/news/international/us/xrp-sinks-6-percent-again-as-sec-delays-bitwise-crypto-etf-is-the-dip-a-red-flag-or-a-golden-buy-signal-heres-the-2025-xrp-price-prediction-you-need-to-see/articleshow/122859722.cms]

[8] [title8: Bitwise ETF Gets Green Light, Then Halted by SEC Review] [url8: https://www.bitdegree.org/crypto/news/bitwise-etf-gets-green-light-then-halted-by-sec-review]