- The SEC approval of Bitwise ETF and its immediate halt causes confusion in the crypto market.
- No clear listing rules continue to maintain spot crypto ETFs at unending hold.
The Securities and Exchange Commission (SEC) gave the Bitwise 10 Crypto Index Fund the go-ahead to become an exchange-traded fund (ETF). This is a big step forward for crypto investment goods in the US. Several hours later, the agency posted a stay, leaving Wall Street and the crypto industry in suspense.
The approval was given on July 22 in the form of an official agency order, which was documented in the public release. The proposal of Bitwise was to restructure BITW, a fund that provides investors with exposure to ten major digital currencies such as Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), and Polkadot (DOT) into a spot ETF. The focus on the industry was also heightened because the move made Bitwise the first diversified spot crypto ETF in the country, which is due to increase investor access and reset the expectations on regulatory clarity.
This is a flagship product that Bitwise manages around 1.7 billion dollars, and it rebalances the assets once a month. Most of the portfolio at the time of approval was BTC and ETH with XRP and a few large altcoins, according to the recent company filings.
Approval Transformed to Uncertainty Within Hours
Source – sec.gov
In its formal stay letter, the agency explained its sudden about-face by citing Rule 431. The order from July 22 is being held until the Commission issues further instructions, according to SEC Assistant Secretary Sherry R. Haywood.
The language is similar to the delays on other similar ETF proposals, such as a recent one on Grayscale multi-asset crypto fund. Both of these approvals were first awarded via delegated authority and then immediately suspended to full commission review. A legal source termed the chain as the type of funny business that ought not to be going on, and the entire state of confusion gripped the investment community.
One more official phrase says: This order shall not take effect until further notice, pending review by commission. The delay provides the agency with unlimited freedom in determining whether the delegated approval is in line with the new standards of crypto ETFs.
SEC Cites Framework Needs In Regulation, Additional Crypto ETF Deadlines Extended
The sudden shift by the SEC caused a holding pattern to the market actors, when some other proposals to create an ETF on cryptocurrencies, including ones to create redemption mechanisms of Bitcoin and Ethereum, as well as Solana tracking, were also logged or stalled. Regulatory watchers took the view that the SEC wanted to complete the work on the generic listing criteria of digital asset ETFs before opening the door to products that track baskets of altcoins or new tokens.
The latest dockets of the agency suggest that it is looking at simplified processes of some categories of ETFs. Some filings can eventually be automated and become exempt from long-established rules like the 19b-4 review, which currently expands the duration of decision-making periods by up to 240 days per filing. Meanwhile, the applicants like Bitwise and Grayscale are in limbo, and investors are waiting to gain clarity.
