The SEC authorized the intended amendment of the Bitwise 10 Crypto Index Fund but abruptly postponed the procedure.
The agency has put on hold its approval, claiming that it will reevaluate its stand on the issue.
SEC Approval Followed by Immediate Reversal
The Division of Trading and Markets of the US Securities and Exchange Commission approved Bitwise’s application to transform its crypto basket index fund into an exchange-traded fund on July 22. However, the agency put the decision on hold. SEC Assistant Secretary Sherry R. Haywood wrote a formal notice regarding Rule 431 of the Commission Rules of Practice. According to her, July 22 approval was still pending.
A crypto index fund publicly traded under the ticker BITW (formerly the Bitwise 10 Crypto Index) contains significant cryptocurrencies, such as Bitcoin, Ethereum, Solana, XRP, and Polkadot. The fund distributes these assets based on market capitalization. Bitwise has not announced the suspension.
Grayscale Fund Faces Similar Action
An identical choice in the Grayscale Digital Large Cap Fund LLC was also discontinued by SEC. This was the same request that Grayscale had earlier gotten approval to convert the closed-end fund to ETF by the agency. But that order was also put on hold a day after.
The Grayscale fund’s portfolio mainly includes Bitcoin and Ethereum. It invests in Bitcoin, approximately 80%, with Ethereum taking 11%. The fund also contains a trace amount of Solana, Cardano, and XRP. Grayscale assured us that it is still working with regulators to get it approved.
The pauses are forthcoming as SEC considers various crypto ETF proposals involving such assets as Solana and Dogecoin.
Experts React to SEC’s Uncertain Approach
It has caused concerns among analysts and industry experts in the crypto sector. A Van Buren Capital general partner, Scott Johnsson, recommended that political pressure might have compromised the SEC decision. He used issues regarding Commissioner Caroline Crenshaw’s stance on crypto as a reference.
James Seyffart, an ETF analyst, affirmed Johnsson’s position. He tweeted that the SEC can keep delaying judgments until it establishes a crypto ETF structure. He further proposed that the agency might develop new listing standards to ease the process.
Existing SEC regulations require the utilization of a 19b-4 form to bring a crypto ETF. Such a form gives rise to a review period totalling 240 days. Nevertheless, according to the sources, the SEC is working on streamlining this process so that it can be shorter and the route to approval can be standardized.
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