Key Insights:
- The SEC approved Bitwise’s crypto index fund conversion to an ETF. Then abruptly paused the decision hours later.
- This sudden reversal is similar to a delay faced by Grayscale’s multi-asset crypto ETF.
- Analysts suspect the pause is linked to political pressure or the lack of clear crypto ETF listing standards.
The U.S. Securities and Exchange Commission recently approved Bitwise’s plan to convert its flagship crypto index fund (BITW) into an ETF.
However, soon after this approval, the agency immediately put the decision on hold for some reason. This abrupt reversal has just added to a growing list of delays and mixed signals from the SEC, concerning crypto-based investment vehicles.
What Is the Bitwise 10 Crypto Index Fund?
Bitwise’s 10 Crypto Index Fund (BITW) was launched in 2017, and gives investors exposure to the crypto market in the general sense.
The BITW holds about 90% of its $1.68 billion in assets in Bitcoin and Ethereum, with the remaining spread across altcoins like Solana, XRP, Cardano, Chainlink, Avalanche, Bitcoin Cash, Uniswap and Polkadot.
The fund is rebalanced monthly and comes with a steep 2.5% expense ratio. This means that if Bitwise had successfully converted it into an ETF, the BITW would become the first multi-asset spot crypto ETF in the United States. This of course, would be a major milestone for the industry.
A Repeat of SEC and Grayscale’s ETF Saga?
This is not the first time the SEC has made an unexplained U-turn on a crypto ETF. Earlier this month, Grayscale’s Digital Large Cap Fund, which tracks a similar basket of digital assets, received approval for ETF conversion, only to be paused shortly after.
In both cases, the language used by the SEC was very similar. The agency referenced a “review of the delegated action.” This trend has led some to speculate that these pauses might be politically motivated.
ETF analyst James Seyffart commented on the unusual timing in a recent X post, noting that the Bitwise application wasn’t even due for a decision until the following week.
We have approval of the @BitwiseInvest 10 Index fund — $BITW — but just like @Grayscale's $GDLC earlier this month, Bitwise has been stayed by either one or multiple commissioners. Meaning they cannot actually convert it into an ETF … *yet* https://t.co/e037clB0kI pic.twitter.com/GQEdtIscar
— James Seyffart (@JSeyff) July 22, 2025
What’s Really Going On at the SEC?
Industry insiders and analysts have come up with several theories to explain the SEC’s contradictory actions.
Scott Johnsson, for example, General Partner at Van Buren Capital, theorised in another post, that the initial approval was rushed through “delegated authority”. He also speculated that it was done to bypass any possible interference from the Commission’s Caroline Crenshaw, who is a Democrat and a strong crypto ETF critic.
This is another crypto index ETP, and it's also been stayed pursuant to Rule 431 (same as Grayscale's Digital Large Cap) to review the delegated authority order. I have to wonder what is going on at the SEC. I can excuse GDLC as an unforeseen unilateral Crenshaw wrench, but this… https://t.co/92z37ZpaE8
— Scott Johnsson (@SGJohnsson) July 22, 2025
Alternatively, Johnsson speculated that this might be a tactic to sidestep the 240-day statutory review window, which is required for ETF decisions. “Both explanations are the kind of funny business that shouldn’t be happening under Chair Paul Atkins,” he wrote.
Bloomberg analyst Eric Balchunas, however, offered a different perspective. He noted that the SEC may be stalling until it releases a standard framework for crypto ETF listings.
This could include guidance on which assets qualify, how they should be priced and what disclosures are necessary. “I think they want to put out their generic listing standards first,” Balchunas said.
Lack of Clear Rules Are Slowing ETF Progress
The main issue now is that the SEC has no consistent framework for evaluating multi-asset crypto ETFs.
Tokens like XRP and Cardano, which are included in Bitwise’s and Grayscale’s funds, don’t currently have standalone ETFs. Moreover, this has raised worries within the agency, about approving index funds (like the BITW) that intend to offer them to clients.
Overall, until asset classifications are more defined for cryptocurrencies other than Bitcoin and Ethereum. The SEC seems very hesitant to approve any applications that could later backfire.
