XRP News Today: SEC Halts Bitwise Crypto ETF Approval Over XRP ADA Inclusion Spurring Regulatory Debate

The U.S. Securities and Exchange Commission (SEC) has sparked debate after initially approving and then pausing the conversion of Bitwise’s 10 Crypto Index Fund (BITW) into a spot exchange-traded fund (ETF). The decision, made on July 22, involved a reversal that left the crypto community questioning the regulator’s rationale. Initially, the SEC’s Division of Trading and Markets approved the ETF’s listing on NYSE Arca under Rule 8.500-E, positioning it as the first diversified crypto ETF for U.S. investors. The fund includes Bitcoin, Ethereum, XRP, Cardano (ADA), Solana (SOL), and other major altcoins [1].

However, hours later, the SEC’s Office of the Secretary invoked Rule 431(e) to halt the approval, triggering a full Commission-level review. The agency provided no specific justification for the reversal but appeared to focus on the inclusion of XRP and ADA, which lack standalone ETF approvals. This move mirrors a similar pattern seen with Grayscale’s Digital Large Cap Fund (GDLC), which also received staff-level approval before being paused by the SEC [2]. Analysts and investors speculate that the SEC is exercising caution to establish clear regulatory frameworks for altcoins before approving broader exposure.

The decision has drawn criticism for its opacity. Nate Geraci, President of ETF Store, called the SEC’s actions “bizarre,” suggesting they involve both procedural and political elements [1]. Xaif, a crypto commentator, highlighted the inconsistency, noting that the SEC’s approach to XRP and ADA resembles a “political game,” given the lack of transparency in its reversals [3]. Grayscale previously challenged its paused ETF approval, citing harm to investors, and Bitwise may follow suit given the similar circumstances.

The SEC’s hesitation underscores ongoing uncertainty around altcoin regulation. While Bitcoin and Ethereum have secured ETF approvals, XRP and ADA remain in a gray area, complicating multi-asset ETF proposals. The regulator’s focus on these tokens aligns with its broader scrutiny of cryptocurrencies without clear legal status. A closed-door SEC meeting scheduled for later this week could provide clarity, particularly regarding the agency’s appeal in the Ripple case. A favorable outcome might pave the way for XRP-specific ETFs and, by extension, altcoin-inclusive index products like Bitwise’s.

The pause leaves Bitwise’s ETF in regulatory limbo, delaying investor access to diversified crypto exposure through regulated channels. The episode reflects the SEC’s balancing act between fostering market innovation and addressing risks associated with untested assets. Whether this is prudent regulation or strategic delay remains contentious, but the agency’s actions continue to shape crypto’s regulatory landscape.

Source: [1] [title1] [url1] [2] [title2] [url2] [3] [title3] [url3]

[1] https://coinmarketcap.com/community/articles/6880c8dd495f675d8ee776c5/

[2] https://coinmarketcap.com/community/articles/6880c8dd495f675d8ee776c5/

[3] https://coinmarketcap.com/community/articles/6880c8dd495f675d8ee776c5/