SEC Halts Bitwise Crypto Index Fund ETF Launch After Initial Approval Granted
The planned launch of the Bitwise Crypto Index Fund ETF has been put on hold by the U.S. Securities and Exchange Commission (SEC), creating uncertainty among market observers. This decision follows the SEC's approval of the fund's conversion into an ETF, but the launch has since been halted using Rule 431(e) for further review.
The Bitwise Crypto Index Fund
The Bitwise 10 Crypto Index Fund, currently an exchange-traded trust (BITW), offers exposure to a diversified basket of major cryptocurrencies. The fund includes top cryptocurrencies by market cap, such as Bitcoin, Ethereum, XRP, Solana, and Polkadot. Bitcoin holds the largest share in the fund at 78.72%, followed by Ethereum with 11.10% and XRP with 4.97%. The remaining 15% of the portfolio includes unapproved assets like XRP and Solana.
The Approval and Pause
The SEC initially approved the conversion of the Bitwise Crypto Index Fund into an ETF on July 22, 2025. However, within hours, the SEC issued a "stay order" under Rule 431, immediately pausing the launch and putting the conversion into limbo. The U.S. Securities and Exchange Commission's Trading and Markets Division stayed the order, citing Rule 431 for further review.
Possible Reasons for the Delay
The reasons for the delay are unclear, but concerns about crypto exposure and political dynamics could be factors. The situation mirrors a similar episode earlier in July, when the SEC paused the conversion of Grayscale's Digital Large Cap Fund into an ETF soon after initial approval. Analysts suspect that internal SEC divisions may be influencing the halts.
Next Steps
The fund remains in regulatory limbo, with the SEC’s full Commission now responsible for determining whether to lift the stay or maintain the pause. Until that review is complete, Bitwise cannot proceed with converting BITW into an ETF, and investors must wait for further regulatory clarity.
Key Details
- The SEC's Trading and Markets Division stayed the order for the Bitwise Crypto Index Fund ETF launch, citing Rule 431 for further review.
- The ETF will follow the Bitwise Crypto Index and will be secured by Coinbase Custody.
- BNY Mellon is responsible for cash management and serves as the fund administrator for the ETF.
- The ETF covers a range of crypto assets already approved for exchange-traded products, making up at least 85% of the portfolio.
- Grayscale's fund also holds Bitcoin, Ethereum, Solana, ADA, and XRP, similar to the Bitwise Crypto Index Fund.
- The SEC is currently reviewing several other crypto ETF proposals, including those tracking tokens like SOL and DOGE.
Background
The Bitwise 10 Crypto Index Fund, which offers exposure to a diversified basket of major cryptocurrencies, was initially approved by the U.S. Securities and Exchange Commission (SEC) on July 22, 2025, for conversion into a spot exchange-traded fund (ETF). This would have made it the first U.S. multi-asset crypto index ETF, significantly broadening investor access to crypto beyond Bitcoin and Ethereum. However, within hours, the SEC issued a “stay order” under Rule 431, immediately pausing the launch and putting the conversion into limbo.
Reason for the Pause
The SEC’s Division of Trading and Markets initially granted an “accelerated approval” for the conversion. However, soon afterward, SEC Assistant Secretary Sherry Haywood issued a notice stating that the “order is stayed until the Commission orders otherwise” and that the full Commission would review the decision. This procedure is standard under Rule 431, which allows the Commission to review and potentially override actions taken by its divisions if there is significant interest or concern.
Summary Table
| Event | Date | Details | |---------------------------------------|----------------|-----------------------------------------------------------------------------------------| | SEC Division Approval | July 22, 2025 | Accelerated approval for conversion to ETF granted | | SEC Stay Order Issued | July 22, 2025 | Full Commission pauses process under Rule 431 for review | | Current Status | July 26, 2025 | Conversion on hold; awaiting Commission decision | | Possible Reasons | — | Internal review, regulatory uncertainty, lack of crypto-specific rules, political factors|
- The Bitwise Crypto Index Fund, currently in a regulatory limbo, awaits a decision from the SEC's full Commission to either lift the stay or maintain the pause, halting the conversion of the fund into an ETF.
- Investors must wait for further clarity from the SEC, as the delay may be due to concerns about crypto exposure, political dynamics, and a lack of crystal-clear crypto-specific rules.
- Meanwhile, the SEC is evaluating several other proposals for cryptocurrency Exchange-Traded Funds (ETFs), including those tracking tokens like Solana (SOL) and Dogecoin (DOGE).
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