The U.S. Securities and Exchange Commission (SEC) approved the expedited conversion of Bitwise's 10-asset crypto index fund to an exchange-traded fund (ETF). However, in an unexpected move, the ETF's launch was halted following a regulatory decision made the same day. This sparked confusion and backlash among both investors and market analysts.
According to the SEC's statement, the approved ETF will track the Bitwise Crypto Index. The index's current allocation includes major cryptocurrencies such as Bitcoin (78.72%), Ethereum (11.10%), and XRP (4.97%), as well as altcoins such as Solana, Cardano, Chainlink, SUI, Avalanche, Litecoin, and Polkadot. Crypto asset custody will be provided by Coinbase Custody, while cash management and administrative duties will be handled by BNY Mellon. According to SEC regulations, at least 85% of the fund must consist of cryptocurrencies currently approved for ETFs. Bitcoin and Ethereum are the leading assets that meet this requirement. The remaining 15% consists of coins that have not yet been approved for ETFs, such as XRP and Solana. The fund will rebalance monthly, adjusting its allocation based on index updates.
The Bitwise ETF will operate similarly to traditional ETFs, as it is designed to issue and redeem shares in large blocks called "Creation Units."
Unexpected hold: Launch suspended
Despite all these developments, the SEC issued a stay order halting the ETF's official launch. Based on the SEC's Rule 431(e), the fund's launch has been postponed indefinitely. As previously reported, this decision was similarly applied to Grayscale's large-cap crypto ETF. ETF Store President Nate Geraci, in a statement on social media platform X, called this decision "bizarre," stating that the SEC's initial approval and subsequent suspension of the launch created significant uncertainty for investors. "This delay clearly contradicts the approval given," Geraci said. "Products like Bitwise and Grayscale need to begin trading as soon as possible."
According to Bloomberg ETF analyst James Seyffart, the SEC's sudden move may be part of a larger strategy. Seyffart suggested that the agency is attempting to delay the listing of such index funds on the exchange until its overall crypto ETF policy is clarified. Indeed, the SEC still hasn't finalized its decision on whether XRP, Solana, and similar assets are securities.
The SEC's decision to curb ETFs hasn't halted the altcoin market. Over the past 30 days, Bitcoin's market dominance has declined from 65% to 60%, while altcoins like Ethereum, Dogecoin, XRP, and Cardano have seen some gains. The Bitwise ETF is currently only traded on the OTC (over-the-counter) market. However, if the SEC's decision is reversed, the fund could be listed on a national exchange, reaching a much broader investor base. This would create a new crypto investment vehicle for both individual and institutional investors.
But for now, the situation remains this: While the Bitwise ETF has technically received approval, the launch has yet to be finalized.
