SEC Hits the Gas, Then Slams the Brakes on Bitwise Crypto ETF
The U.S. Securities and Exchange Commission (SEC) has halted its own decision to approve the conversion of Bitwise’s 10 Crypto Index Fund into a spot exchange-traded fund (ETF), injecting fresh uncertainty into the regulatory landscape for digital asset products.
Accelerated Approval Reversed Within Hours
On Tuesday, the SEC’s Division of Trading and Markets initially granted accelerated approval for Bitwise’s request to convert its over-the-counter fund into a spot ETF. This would have enabled Bitwise to fast-track the process of launching the first multi-asset crypto index ETF in the U.S.
However, in a separate communication issued the same day, SEC assistant secretary Sherry Haywood announced that the approval order was “stayed until the Commission orders otherwise,” placing the decision under full Commission review. The language mirrored a recent SEC letter halting the ETF conversion plans of Grayscale’s Digital Large Cap Fund.
Bitwise ETF Conversion Plans on Hold
Bitwise had submitted its ETF conversion proposal in November, aiming to shift its Bitwise 10 Crypto Index Fund (ticker: BITW) into a regulated ETF structure. The fund, first launched in 2017, offers diversified exposure to leading digital assets including Bitcoin and Ethereum, along with smaller allocations to tokens such as Solana, XRP, and Cardano.
The proposed conversion would mark a significant milestone for the U.S. crypto ETF market. Despite a relatively high 2.5% expense ratio compared to traditional ETFs, the fund’s multi-asset structure would have set it apart from the single-asset spot Bitcoin ETFs approved earlier in 2024.
Regulatory Caution Amid ETF Expansion
The SEC’s decision to pause Bitwise’s ETF echoes its recent handling of Grayscale’s application for the Digital Large Cap Fund. In both cases, initial accelerated approvals were quickly followed by regulatory reversals, indicating internal debate or broader policy concerns.
According to sources close to the matter, the SEC is evaluating how to consistently treat multi-asset crypto ETFs, particularly those including tokens like ADA and XRP, which currently lack dedicated spot ETFs. The regulatory body is reportedly working on a framework to standardize the listing process and reduce delays associated with the current 19b-4 form procedure, which requires review periods of up to 240 days.
Bloomberg ETF analyst James Seyffart noted that the SEC may be intentionally delaying approvals while it finalizes these broader listing standards.
Outlook Uncertain for Bitwise and Others
Neither Bitwise nor the SEC has confirmed a new timeline for the ETF’s potential launch. While the firm has not disclosed whether it will maintain the current 2.5% management fee if the ETF moves forward, its proposal remains pending as the Commission weighs its next move.
For now, both Bitwise and Grayscale remain in a regulatory holding pattern, as the SEC grapples with creating a uniform approach to crypto ETF listings in an evolving digital asset landscape.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice
source : https://cryptodaily.co.uk