Bitwise’s Crypto ETF Halted by SEC After Initial Approval This Week

TLDR

• SEC halts Bitwise’s crypto ETF after staff approval, citing discretionary review.

• Grayscale faced similar SEC setbacks, delaying its crypto fund’s approval earlier.

• Bitwise’s ETF tracks top 10 crypto assets, offering broader market exposure.

• SEC delays raise concerns over procedural uncertainty for crypto ETF issuers.

The U.S. Securities and Exchange Commission (SEC) paused the approval of Bitwise’s 10 Crypto Index ETF, only hours after staff had given the green light. The ETF, which was designed to track the performance of the top 10 largest cryptocurrencies by market cap (excluding stablecoins and wrapped tokens), was initially approved by the SEC’s Division of Trading and Markets. However, the approval was quickly suspended following a discretionary review.

The move follows a similar scenario earlier this month when Grayscale’s Digital Large Cap Fund (GDLC) also faced a setback under the same rule after receiving staff approval to convert into a spot ETF. The SEC has the authority to pause any decision made by staff for further review, which leaves the approval of crypto-related ETFs in a state of uncertainty.

According to Rule 431, once the SEC’s Office of the Secretary invokes a full Commission review, the approval process is automatically suspended. The Commission is then required to decide whether to affirm, modify, or reverse the staff’s decision. There is no timeline for this decision, and the SEC is not required to explain its reasoning to the public.

This process has created a sense of uncertainty among ETF issuers, particularly those involved in multi-asset crypto funds. Nate Geraci, co-founder of the ETF Institute, described the situation as “bizarre,” emphasizing the confusion caused by the lack of clarity in the approval process. He stated on social media that both Bitwise’s and Grayscale’s ETFs should be allowed to convert and uplist without further delays.

SEC Division of Trading & Markets has *approved* the Bitwise 10 Crypto Index ETF…

However, like with the Grayscale Digital Large Cap ETF, this approval order is stayed.

IMO, both of these should be allowed to convert/uplist asap.

Bizarre situation. pic.twitter.com/i12efttQAZ

— Nate Geraci (@NateGeraci) July 22, 2025

The delay is particularly frustrating for companies hoping to offer investors diversified exposure to digital assets through exchange-traded funds (ETFs). However, some public comments raised concerns about the risks associated with market manipulation and the reliability of crypto pricing data, which the SEC may consider in its review.

In the case of Bitwise’s ETF, some members of the public expressed concerns about the lack of sufficient market surveillance and the potential for fraud within the underlying crypto markets. These concerns were raised in public comments following the SEC’s initial approval, urging the commission to reject the ETF filing altogether.

The crypto market is still relatively young and is often criticized for its susceptibility to volatility and manipulation, which may explain the SEC’s cautious approach.

As part of its review, the SEC will need to weigh these risks and decide whether the market conditions are conducive to approving a broader range of crypto products like multi-asset ETFs. Some industry observers are hopeful that approval will come soon, despite the delays. However, the regulatory environment remains a significant challenge for crypto asset managers and investors alike.

This regulatory uncertainty is part of a larger pattern of hesitation from the SEC when it comes to approving crypto-related financial products.

The SEC’s approach to regulating crypto ETFs has been a topic of debate for some time, as the agency attempts to balance investor protection with fostering innovation. The review process for Bitwise’s ETF is likely to add to the growing uncertainty faced by crypto-related asset managers.

Despite these challenges, ETF issuers are continuing to push forward with their applications. The recent filings by firms like Invesco Galaxy, Ark 21Shares, VanEck, and WisdomTree to introduce Bitcoin and Ethereum ETFs demonstrate that interest in crypto products remains high. These firms are hopeful that the SEC will eventually approve their funds, but they too may face the same delays that Bitwise and Grayscale have experienced.