- SEC approved, then stayed Bitwise’s crypto ETF conversion for further review.
- The move mirrors Grayscale’s ETF delay under similar regulatory circumstances.
- SEC may be working on new listing standards to streamline future crypto ETF approvals.
The U.S. Securities and Exchange Commission (SEC) has approved, then promptly paused, the conversion of Bitwise’s crypto index fund into an exchange-traded fund (ETF). Bitwise had applied to convert its Bitwise 10 Crypto Index Fund, trading under the ticker BITW, into an ETF. The approval came through the SEC’s Division of Trading and Markets via an accelerated process. However, a stay was issued the same day by SEC Assistant Secretary Sherry Haywood, pending a full commission review.
According to a filing dated July 22, 2025, the SEC’s accelerated approval allowed Bitwise to request early effectiveness of its registration. Yet, the commission stayed the order under Rule 431 of the Commission’s Rules of Practice. The order will remain inactive until the full Commission issues further instructions. Both Bitwise and the SEC declined to comment when approached by media outlets.
Similar to Grayscale’s Conversion Delay
The situation closely mirrors the SEC’s earlier actions regarding Grayscale’s ETF conversion proposal. Grayscale had received accelerated approval to convert its Digital Large Cap Fund into an ETF. However, the SEC stayed that approval shortly after issuing it, also invoking Rule 431. Grayscale’s fund, primarily composed of Bitcoin and Ether, remains in limbo following the commission’s intervention.
The Grayscale Digital Large Cap Fund holds roughly 80% Bitcoin and 11% Ether, with smaller allocations to other digital assets. Like Bitwise’s fund, Grayscale’s investment vehicle trades over-the-counter and targets institutional investors. The SEC has not clarified its long-term stance on these pending ETF conversions. Both cases suggest ongoing internal deliberations on how to regulate crypto investment products.
Speculation Surrounds SEC’s Motives
Industry analysts have speculated on the SEC’s motives for issuing and then pausing the ETF conversions. Bloomberg ETF analyst James Seyffart noted that one or more SEC commissioners likely intervened, triggering the stays. He indicated that although the decisions were issued earlier than expected, the final conversion remains on hold.
Scott Johnsson of Van Buren Capital wrote that the break could be foreseeable. He hypothesized that the SEC expects to receive internal resistance, perhaps from Commissioner Caroline Crenshaw, whose view of crypto is critical. Other people consider the wait to be a possible component of an approach to work through the 240-day statutory perspective schedule.
SEC May Be Preparing New Crypto ETF Framework
Multiple sources suggest that the SEC is working on establishing listing standards for crypto ETFs. This effort may aim to streamline the ETF approval process in the future. Bloomberg analyst Eric Balchunas mentioned the commission might be delaying current conversions until such a framework is in place. Under current rules, ETF proposals require a 19b-4 filing, triggering a review period of up to 240 days.
New listing standards could automate parts of the ETF approval process, especially for funds focused on mainstream digital assets. These developments follow efforts by the SEC to improve clarity and consistency in its treatment of crypto-based financial products. The proposed changes would allow exchanges and fund managers to bypass prolonged review cycles.
Related: SEC Approves Grayscale’s Mixed Crypto Fund Conversion Into ETF
Regulatory Environment Shifting Under New Administration
All these steps of the SEC are made as part of a wider regulatory trend that has been taking place since the election of President Donald Trump. Recently, there has been a rise in politicians who demand stricter control of crypto, with an ETF listing being included. A number of newer offers, targeting assets such as Solana and Dogecoin, have appeared. This implies an enlarging spectrum of investment products in the crypto family to be considered by the regulators.
The industry stakeholders closely monitor developments that impact the timing and nature of future ETF approvals. It would seem that the regulatory agency is interested in achieving a position of consistency prior to accepting more ETF conversions.
