24.07.2025 01:03

The U.S. Securities and Exchange Commission (SEC) initially approved Bitwise Asset Management's application to transform its Bitwise 10 Crypto Index Fund (BITW) into a spot Bitcoin exchange-traded fund (ETF). This accelerated approval, granted on July 22nd, was quickly followed by a surprising and unprecedented reversal.

In a highly unusual turn of events, the SEC issued a stay order, effectively halting the ETF's launch pending further internal review. This action, described by Bloomberg ETF analyst Nate Geraci as "bizarre," invokes Rule 431 of the Commission's Rules of Practice, allowing for independent review of decisions made by its staff. This isn't the first instance of this kind of intervention this month; the SEC previously blocked Grayscale's similar application for a mixed crypto ETF.

This unexpected intervention has drawn considerable criticism from industry analysts. Geraci, in a post on X (formerly Twitter), publicly urged the SEC to swiftly approve both Bitwise's and Grayscale's applications. The delayed ETF, which was slated to trade on the NYSE Arca as a "Trust Unit," features a diversified basket of top cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), Cardano (ADA), Chainlink (LINK), SUI, Avalanche (AVAX), Polkadot (DOT), and Litecoin (LTC).

Consequently, while the SEC's review remains underway, the trading of BITW shares is currently limited to over-the-counter markets. The SEC's Rule 431 allows for such interventions, automatically suspending the original decision until a final determination is made, a process with no defined timeline. This uncertainty hangs over Bitwise, a firm currently managing approximately $5.79 billion in assets, while they await the SEC's final decision. The situation highlights the ongoing regulatory complexities surrounding cryptocurrency ETFs in the United States.