In a surprising twist, the U.S. Securities and Exchange Commission (SEC) granted approval for Bitwise’s cryptocurrency index fund to convert into an exchange-traded fund (ETF)—and then immediately suspended the approval just hours later.
On Tuesday, the Division of Trading and Markets at the SEC granted an Expedited approval to the Bitwise 10 Crypto Index Fund (BITW) that will enable Bitwise to bypass the entire ETF conversion process. But a different letter issued that day by a ventriloquist-like SEC Assistant Secretary Sherry Haywood said the order approving the motion had been simply stayed, until further order of the full Commission, meaning that the whole Commission would now take a look at the move.
Bitwise applied to transfer its index fund into an ETF as early as November 2024. The fund gives access to a basket of cryptocurrencies, such as Bitcoin, and Ether.
The change of mind by the SEC has left the crypto and the financial world with raised eyebrows.
Comparisons to Grayscale Case Raise Concerns
The situation bears similarities to the SEC’s treatment of Grayscale’s Digital Large Cap Fund, which was also approved for ETF conversion on July 1, only to be paused shortly after. Bloomberg ETF analyst James Seyffart pointed out on X (formerly Twitter) that Bitwise’s decision wasn’t even due until next week, making the early approval—and subsequent pause particularly unusual.
“This ETF was stayed by either one or multiple commissioners,” Seyffart explained. “That means Bitwise can’t actually proceed with the conversion yet.”
Nate Geraci, president of NovaDius Wealth Management, called the situation “bizarre,” while Bloomberg senior analyst Eric Balchunas speculated that the SEC might be delaying ETF rollouts until it finalizes new listing standards for crypto ETFs.
“They likely want to issue standard guidelines first, collect comments, and implement them before major October deadlines,” Balchunas said.
Political Motives or Regulatory Strategy?
Some experts believe internal politics may be at play. Scott Johnsson, a general partner at Van Buren Capital, suggested that the approval was issued under delegated authority to bypass potential opposition from SEC Commissioner Caroline Crenshaw, a known skeptic of crypto products. Johnsson also floated the possibility that this pause is a strategic move by SEC Chair Paul Atkins to navigate around the 240-day statutory limit for approval.
“These are the kinds of regulatory games that undermine confidence,” Johnsson said.
Other Delays Continue
The SEC is also pushing back deadlines for decisions on in-kind redemption processes for Bitwise’s spot Bitcoin and Ether ETFs. Meanwhile, ETF issuers, stock exchanges, and regulators are reportedly working on streamlining the ETF approval process—including proposals to eliminate the need for certain 19b-4 filings, which currently slow down crypto ETF launches.
With the SEC’s decision now under internal review, Bitwise’s ETF remains in limbo. The company and the SEC have yet to comment publicly on the situation.
As analysts and industry insiders debate whether this is political maneuvering or procedural caution, one thing is clear: regulatory uncertainty around crypto ETFs in the U.S. is far from over.
