SEC Approves Bitwise’s Crypto ETF Then Immediately Pauses It

The US Securities and Exchange Commission approved and then immediately paused the conversion of Bitwise’s crypto index fund into an exchange-traded fund, leaving it in limbo pending a review.

The SEC’s division of trading and markets granted an “accelerated approval” of the Bitwise 10 Crypto Index conversion into an ETF on Tuesday, which means Bitwise could request that the SEC declare the registration effective earlier than the regular timeline.

However, in a letter the same day, SEC assistant secretary Sherry Haywood said the “order is stayed until the Commission orders otherwise,” and the “Commission will review the delegated action.”

Bitwise’s cryptocurrency index fund, the Bitwise 10 Crypto Index Fund, which trades under the ticker BITW, currently consists of exposure to various cryptocurrencies including Bitcoin (BTC) and Ether (ETH). The firm applied to convert it into an ETF in November.

The SEC and Bitwise did not immediately respond to a request for comment.

Situation mirrors Grayscale ETF delay

Bloomberg ETF analyst James Seyffart said in an X post on Tuesday that the Bitwise ETF has been “stayed by either one or multiple commissioners. Meaning they cannot actually convert it into an ETF…yet.”

“This wasn’t due for a decision until next week. So the SEC went pretty early with this decision.”

NovaDius Wealth Management president Nate Geraci called it a “bizarre situation,” and said it’s similar to the Grayscale Digital Large Cap ETF conversion delay, which was approved on July 1 and then paused soon after.

“IMO [in my opinion], both of these should be allowed to convert/uplist asap,” Balchunas said.

“Funny business” going on at SEC, says exec 

Scott Johnsson, general partner at investment management firm Van Buren Capital, said in an X post on Tuesday that the Bitwise ETF was approved “under delegated authority” and speculated this was done as the SEC believed its sole Democrat commissioner, Caroline Crenshaw, would try to disrupt the approval process.

Alternatively, Johnsson speculated that the pause might be a plan by the SEC, now chaired by Paul Atkins, to get around the 240-day statutory period for final approval.

“Both explanations are the kind of funny business that shouldn’t really be happening under Atkins.”

Bloomberg ETF analyst Eric Balchunas said he thinks the SEC might be stalling until the agency comes up with a listing standard for crypto ETFs.

Related: SEC acknowledges Trump’s Truth Social Bitcoin and Ethereum ETF

“I think they want to put out their generic listing standards first, which is probably coming soon. Get comments. Implement in time [for] October due dates. That’s my theory anyway,” he said.

Other ETF delays as SEC considers simplifying approvals

The SEC also extended its deadline for ruling on in-kind redemptions for Bitwise’s Bitcoin and Ether spot ETFs on July 17.

Reporter Eleanor Terrett said on July 1 that stock exchanges, fund managers and the SEC are exploring simplifying the ETF approval process for select crypto investment vehicles.

The expedited process would automate portions of the current application procedures, allowing certain ETF issuers to circumvent 19b-4 filings.

Magazine: SEC’s U-turn on crypto leaves key questions unanswered