In a surprising turn of events, the US Securities and Exchange Commission (SEC) has approved but immediately paused the conversion of Bitwise’s flagship crypto index fund into an exchange-traded fund (ETF), leaving the process in limbo pending further review.
On Tuesday, the SEC’s Division of Trading and Markets granted “accelerated approval” for Bitwise to convert its Bitwise 10 Crypto Index Fund (trading under the ticker BITW) into an ETF. This approval would have allowed Bitwise to request an earlier effective registration date, ahead of the standard timeline. However, in a letter issued the same day, SEC assistant secretary Sherry Haywood announced that the approval was “stayed until the Commission orders otherwise,” adding that the Commission would review the delegated action.
The Bitwise 10 Crypto Index Fund holds exposure to multiple cryptocurrencies, including Bitcoin (BTC) and Ether (ETH). Bitwise initially filed for its conversion into an ETF in November last year.
Bloomberg ETF analyst James Seyffart commented on X that the decision has been “stayed by either one or multiple commissioners,” meaning Bitwise cannot proceed with its conversion yet. Seyffart noted that the SEC acted earlier than expected, as a decision was originally due next week.
Industry experts have described the situation as unusual. Nate Geraci, president of NovaDius Wealth Management, called it “bizarre,” comparing it to the delayed approval of Grayscale’s Digital Large Cap ETF, which faced a similar pause shortly after its initial approval on July 1.
Scott Johnsson, general partner at Van Buren Capital, suggested that the ETF was approved “under delegated authority”, possibly to avoid potential disruptions from SEC’s sole Democrat commissioner, Caroline Crenshaw. Alternatively, he speculated that the pause could be a strategic move under SEC Chair Paul Atkins to bypass the statutory 240-day approval period.
Bloomberg’s Eric Balchunas offered another perspective, suggesting that the SEC may be waiting to finalise a standard framework for crypto ETFs before allowing such conversions to proceed.
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