US SEC Greenlights Bitwise ETF Conversion, Then Halts It Immediately
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The U.S. Securities and Exchange Commission (SEC) has abruptly paused Bitwise’s plan to convert its over-the-counter (OTC) crypto index fund into a spot exchange-traded fund (ETF), just hours after the application received initial fast-track approval from the Division of Trading and Markets on July 22.
SEC’s Post-Approval Delay Pattern Resurfaces
An official stay order issued by the SEC’s Office of the Secretary temporarily blocks the Bitwise ETF conversion pending further review. If the process resumes, the Bitwise 10 Crypto Index Fund (BITW) would be listed on NYSE Arca, as outlined in the SEC’s official notice.
https://twitter.com/LondonRealTV/status/1948000127479918939
Originally proposed in November 2024, the Bitwise ETF conversion targets the transformation of a fund that launched in 2017 and currently manages about $1.68 billion in assets.
Over 70% of the allocation is dedicated to Bitcoin, with Ethereum accounting for 13%. The rest includes XRP, Solana, Cardano, Sui, Chainlink, and other cryptocurrencies.
This is the second time within weeks that the SEC has taken this kind of action. Earlier in July, the commission approved the Grayscale Digital Large Cap Fund (GDLC) for ETF status and then immediately froze the process.
Like Bitwise, Grayscale holds major digital assets and saw the reversal as a regulatory overstep.
Grayscale responded with a letter stating the SEC had exceeded its authority, arguing that since the 240-day statutory review period had expired, the approval should be final.
NEW: @Grayscale and their lawyers filed a letter in response to the SEC's "Stay" order on $GDLC's ETF conversion arguing that the SEC didn't have the power to do this. pic.twitter.com/9m1J30eiJb
— James Seyffart (@JSeyff) July 11, 2025
The firm maintained that delaying the process after the legal window closes violates procedure and damages investor interests. The company signaled it may move forward with the launch while the issue remains under review.
Could Political Pressure or Lack of Clear ETF Framework Be Behind Sudden Reversal?
The timing of the SEC’s pause in the Bitwise ETF conversion has raised concerns among legal and financial analysts. Some believe the reversal is less about the fund’s structure and more about politics or the absence of a clear framework for digital asset ETFs.
Scott Johnsson, general partner at Van Buren Capital, noted that the application was approved under delegated authority, possibly to avoid opposition from SEC commissioners like Caroline Crenshaw.
Johnsson’s tweet pointed to the possibility that the SEC used this method to bypass internal conflict.
https://twitter.com/SGJohnsson/status/1947770297601691660
He also suggested the SEC might be employing a legal strategy to reset the 240-day clock through these abrupt pauses, allowing the agency more time to deliberate without issuing formal denials.
This interpretation found support in a related comment by James Seyffart, who emphasized that the SEC may be buying time to implement consistent digital asset listing standards.
Eric Balchunas, another ETF analyst at Bloomberg, shared a similar perspective. He believes the SEC wants to finalize uniform rules before allowing more crypto funds like the Bitwise ETF to move forward.
https://twitter.com/EricBalchunas/status/1947776960303693977
Meanwhile, the crypto ETF market continues to attract massive investor interest. Since January 2024, spot Bitcoin ETFs have pulled in over $50 billion in net cumulative inflows.
Bitwise aims to enter that same fast-growing space. But without clear regulatory guidelines, the Bitwise ETF conversion remains stuck in limbo, yet another example of the SEC’s growing pattern of post-approval delays in the crypto ETF landscape.
