23.07.2025 02:38
The Securities and Exchange Commission (SEC) unexpectedly halted the conversion of another cryptocurrency exchange-traded fund (ETF) on Tuesday, creating further uncertainty in the crypto market. This decision, impacting Bitwise's 10 Crypto Index ETF, follows a similar action earlier this month against Grayscale's Digital Large Cap Fund.
Initially, the SEC's Division of Trading and Markets had greenlighted Bitwise's ETF application. This approval would have enabled the New York Stock Exchange Arca to list the fund under Rule 8.500-E, a regulation specifically designed for asset-backed exchange-traded products. However, the SEC's Office of the Secretary swiftly intervened, invoking Rule 431, which allows the full Commission to review staff-level decisions. This automatic review resulted in an immediate suspension of the approval, leaving the ETF's future uncertain.
This second instance of the SEC overturning staff recommendations within a single month has sparked considerable unease among crypto ETF proponents. The abrupt reversal of Bitwise's approval, mirroring the earlier situation with Grayscale, suggests a potential internal conflict within the SEC regarding the approval of broader cryptocurrency products. The lack of a required timeline or public explanation for these reviews leaves applicants in a precarious position, facing indefinite delays despite initial staff approval.
Industry expert Nate Geraci, co-founder of The ETF Institute, described the situation as "bizarre," highlighting the procedural inconsistencies and uncertainty surrounding crypto ETF conversions. He publicly advocated for the immediate approval of both the Bitwise and Grayscale funds, expressing frustration at the seemingly arbitrary delays imposed by the SEC's actions. The ongoing uncertainty created by these actions is causing considerable concern amongst firms seeking to launch similar multi-asset crypto ETFs, as the SEC's actions create a significant hurdle to market entry. The SEC's actions, sourced from internet reports, are generating significant debate and uncertainty in the industry.
