This is another crypto index ETP, and it’s also been stayed pursuant to Rule 431 (same as Grayscale’s Digital Large Cap) to review the delegated authority order. I have to wonder what is going on at the SEC. I can excuse GDLC as an unforeseen unilateral Crenshaw wrench, but this
Trading Secrets
23-07-2025 14:23
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SEC approved, then paused Bitwise crypto ETF conversion
In a surprising regulatory twist, the US Securities and Exchange Commission (SEC) has applied the brakes on Bitwise Asset Management’s effort to convert its cryptocurrency index fund into a spot exchange-traded fund (ETF).
Although the ETF was briefly greenlit under the SEC’s delegated authority, it was quickly halted pending further review by the Commission.
The abrupt reversal mirrors recent patterns and has raised new questions about the SEC’s evolving stance on crypto investment products.
Bitwise gets green light, then a red light
On July 22, 2025, the SEC’s Division of Trading and Markets granted what’s known as an “accelerated approval” for Bitwise’s 10 Crypto Index Fund to be converted into an ETF.
This approval, which would have allowed Bitwise to request earlier activation of its ETF listing, signalled what many saw as a progressive shift in crypto regulation.
However, later that same day, SEC Assistant Secretary Sherry R. Haywood issued a formal stay on the approval.
Citing Rule 431 of the Commission’s Rules of Practice, Haywood confirmed the Commission would review the delegated decision. Until then, the order is effectively frozen.
This development leaves Bitwise’s ETF plans in limbo — neither fully rejected nor able to proceed.
A pattern of approval reversals at the SEC
This is not the first time the SEC has granted and then paused approval for a crypto ETF.
Just weeks earlier, Grayscale’s Digital Large Cap Fund faced a similar fate.
After receiving an accelerated approval to convert its fund into an ETF, the Commission stayed the decision shortly thereafter.
Grayscale, which has long pushed for expanded access to digital assets through public markets, expressed concern over the delay.
Company representatives warned that investors may suffer harm due to regulatory uncertainty, hinting that legal action could be considered if the impasse continues.
Both Bitwise and Grayscale have emphasised that their proposed ETFs offer diversified exposure to leading cryptocurrencies, including Bitcoin, Ethereum, XRP, Solana, and Cardano.
These products are designed to appeal to both institutional and retail investors who want regulated, broad-based access to the crypto market.
Experts blame the pause on politics and process
Industry analysts are speculating that internal politics may be influencing the SEC’s decisions.
Scott Johnsson, a general partner at Van Buren Capital, suggested that the initial approval may have been granted with the knowledge that a more crypto-sceptical commissioner, likely Caroline Crenshaw, would challenge the decision.
Some observers believe the pause may also be a strategic move by the SEC’s leadership, under Chair Paul Atkins, to reset or delay the 240-day window required for final ETF approval.
Others argue that the Commission may be stalling until it can establish broader listing standards for all crypto-based ETFs.
Bloomberg Intelligence analyst James Seyffart echoed this view, stating that the SEC might be waiting to implement generic ETF listing standards.
These standards, if rolled out in the coming months, could streamline the approval process for a growing number of crypto investment vehicles.
A larger crypto ETF shift is underway
The SEC’s stop-and-go decisions are unfolding against the backdrop of a shifting regulatory landscape.
Since President Donald Trump took office in January 2025, crypto markets have seen a more favourable policy tone.
Multiple ETF applications — including funds tracking Solana (SOL), Dogecoin (DOGE), and Shiba Inu (SHIB) — are currently under SEC review.
At the same time, the Commission is reportedly working with exchanges and asset managers to simplify the approval framework.
Discussions have focused on automating parts of the application process and potentially reducing reliance on the complex 19b-4 filing procedure, which can stretch ETF approval timelines for months.
For now, Bitwise’s ETF conversion remains on hold, with no clear timeline for resolution.
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