XRP News Today: SEC Halts Bitwise ETF Conversion After Approval Citing Rule 431

The U.S. Securities and Exchange Commission (SEC) has triggered regulatory uncertainty by initially approving and then halting Bitwise Asset Management’s proposal to convert its 10 Crypto Index Fund into a spot exchange-traded fund (ETF). On July 22, 2025, the SEC’s Division of Trading and Markets granted an accelerated approval for the conversion, signaling a potential shift in crypto regulation. However, later that day, Assistant Secretary Sherry R. Haywood issued a stay order under Rule 431 of the Commission’s Rules of Practice, freezing the decision pending further review by the full commission [1]. This abrupt reversal has left Bitwise’s ETF conversion in limbo, raising questions about the agency’s internal dynamics and crypto-related policy priorities.

The BITW fund, which already provides exposure to a basket of major cryptocurrencies including Bitcoin, Ethereum, XRP, Solana, and Cardano, holds approximately 90% of its assets in BTC and ETH, with XRP accounting for 6.7% and other altcoins making up the remainder [1]. If the conversion had proceeded, BITW would have become the first multi-asset crypto index ETF in the U.S., offering institutional and retail investors regulated access to crypto markets through traditional brokerage platforms. This marks the second such reversal in July, following a similar pause on Grayscale’s Digital Large Cap Fund (GDLC) conversion weeks earlier [1].

Industry analysts speculate that internal politics may influence the SEC’s decisions. Scott Johnsson of Van Buren Capital suggested the initial approval may have been anticipated to be challenged by Commissioner Caroline Crenshaw, known for her crypto-skeptic stance [1]. Others argue the pause could be a strategic move to delay the 240-day window for final approval or to establish broader listing standards for crypto ETFs. Bloomberg Intelligence’s James Seyffart noted that the SEC might be waiting to implement standardized rules that could streamline future applications [1].

The inclusion of XRP and Cardano (ADA) in BITW’s portfolio has drawn particular scrutiny. While the SEC did not explicitly reference these tokens in its public statements, analysts like Nate Geraci of NovaDius Wealth Management highlighted concerns over their regulatory status [1]. XRP’s ongoing legal battle with the SEC over its classification as a security, and ADA’s potential regulatory challenges, may complicate the approval process. The agency’s use of Rule 431(e)—a provision typically reserved for complex cases requiring further scrutiny—underscores the novelty of multi-asset crypto ETFs and the lack of established regulatory frameworks [4].

This pattern of approval reversals reflects broader regulatory indecision in the crypto space. The SEC’s halt of BITW’s conversion mirrors its recent actions on GDLC, both involving multi-asset funds and invoking Rule 431(e) [1]. These moves have created a climate of uncertainty for market participants, who now face inconsistent and opaque approval processes. While the agency has historically been skeptical of crypto ETFs, the market’s rapid evolution—marked by institutional adoption and price volatility—has intensified pressure for clearer guidelines.

The SEC’s decision highlights the tension between fostering innovation and ensuring investor protection. By delaying BITW’s uplisting, the agency has postponed a product that could democratize access to crypto assets for millions of retail investors. However, the move also signals a need for standardized oversight, particularly as the crypto market matures. Industry participants now await further clarification from the SEC on its criteria for multi-asset crypto ETFs and the implications of the BITW review for future applications [6].

Source:

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

[4] [“Bitcoin News Today: SEC Halts Bitwise Crypto ETF Launch…”](https://www.ainvest.com/news/bitcoin-news-today-sec-halts-bitwise-crypto-etf-launch-hours-approval-citing-rule-431-2507/)

[6] [“SEC Halts Bitwise Crypto ETF Approval Over XRP ADA…”](https://www.ainvest.com/news/xrp-news-today-sec-halts-bitwise-crypto-etf-approval-xrp-ada-inclusion-spurring-regulatory-debate-2507/)