XRP News Today: SEC Halts Bitwise's Crypto Index ETF Conversion Under Rule 431

The U.S. Securities and Exchange Commission (SEC) abruptly halted the conversion of Bitwise’s 10 Crypto Index Fund into an exchange-traded fund (ETF) after initially approving it, reigniting debates over regulatory consistency in crypto fund approvals. The decision, announced in late July 2025, left the fund—which includes XRP, Bitcoin, Ethereum, and other major cryptocurrencies—in a state of regulatory limbo [1]. The ETF had received staff-level approval from the SEC’s Division of Trading and Markets but was paused hours later by the Office of the Secretary under Rule 431, which empowers the full Commission to review staff decisions [2]. This move mirrored a similar halt of Grayscale’s Digital Large Cap ETF (GDLC) conversion, raising questions about the agency’s internal coordination [3].

The halted Bitwise product aimed to provide U.S. investors with diversified exposure to a basket of cryptocurrencies through NYSE Arca, excluding stablecoins and wrapped tokens. Its inclusion of XRP, a token long excluded from traditional financial products, underscored growing demand for regulated crypto access. However, the SEC’s reversal denied retail investors a straightforward avenue to invest in XRP and other altcoins, which remain absent from most spot ETF offerings [4]. ETF analyst Nate Geraci criticized the action as “bizarre,” highlighting the contradiction with the agency’s recent pro-crypto statements under its new leadership [5].

Industry observers noted the SEC’s decision exposed procedural inefficiencies, as staff units approve products only for the Commission to reverse them without public explanation. This inconsistency has delayed broader crypto ETF approvals, with industry forecasts suggesting potential timelines for spot-based altcoin ETFs could extend into late 2025 [6]. Polymarket traders, however, priced an 85% probability of SEC approval for a standalone XRP ETF by year-end, reflecting lingering optimism despite the current setback [7].

The episode also highlighted regulatory ambiguity surrounding XRP’s classification, which has historically been a point of contention. Bitwise’s separate standalone XRP ETF application, filed in October 2024, is pending a final decision by October 20, 2025, adding layers of uncertainty. Analysts suggest the SEC may prioritize establishing a unified framework for crypto ETFs rather than rejecting proposals outright, but the lack of clarity complicates product development for firms [8].

Retail investors, meanwhile, face limited options for diversified crypto exposure. While leveraged and futures-based products exist, the absence of a regulated index fund exacerbates accessibility challenges. The SEC’s actions have intensified scrutiny of its role in balancing innovation with investor protection, with market participants urging transparency in its decision-making process.

Sources:

[1] [Bitwise Gets XRP ETF Approval from SEC, But Trading...](https://coinpedia.org/news/bitwise-gets-xrp-etf-approval-from-sec-but-trading-halted/)

[2] [SEC Approves, Immediately Pauses Bitwise's Bid to...](https://finance.yahoo.com/news/sec-approves-immediately-pauses-bitwises-215055666.html)

[3] ['Bizarre': ETF with XRP Exposure Hits Major SEC Roadblock](https://u.today/bizarre-etf-with-xrp-exposure-hits-major-sec-roadblock)

[4] [SEC Postpones Bitwise ETF With XRP, BTC, SOL & More...](https://watcher.guru/news/sec-postpones-bitwise-etf-with-xrp-btc-sol-more-after-approval)

[5] ['Bizarre': ETF with XRP Exposure Hits Major SEC Roadblock](https://u.today/bizarre-etf-with-xrp-exposure-hits-major-sec-roadblock)

[6] [The US SEC approved Bitwise's crypto index fund changes...](https://www.cryptopolitan.com/sec-oks-bitwise-fund-changes/)

[7] [SEC Approves Then Stays Bitwise Crypto ETF Conversion](https://coinpaper.com/10104/sec-approves-then-stays-bitwise-crypto-etf-conversion)

[8] [Bitwise ETF Conversion Including XRP Halted by SEC – What is Going On?](https://coinmarketcap.com/community/articles/6880af15bd85833dc2f9fa6a/)