SEC Stuns Crypto Markets: Approves—Then Abruptly Freezes—Spot XRP & Altcoin ETF

In a whiplash-inducing move, the SEC just gave crypto investors whiplash—greenlighting the first-ever spot XRP and altcoin ETF, only to slam the brakes hours later. Regulatory whiplash at its finest.

The 180 no one saw coming

Just as traders were popping champagne over the landmark approval, the Commission dropped the hammer with an administrative freeze. No explanation, no timeline—just classic SEC opacity meets crypto’s breakneck pace.

Wall Street’s crypto FOMO just hit a speed bump

Bankers were already dusting off their ‘digital asset’ pitch decks when the freeze hit. Now the ETF’s fate hangs in limbo—while the usual suspects profit from the volatility. Some things never change in finance.

Another Spot XRP ETF On Hold

Bitwise’s trust already trades over the counter under the symbol BITW, but the conversion to an exchange-traded fund would have moved the vehicle onto a national exchange for the first time. The SEC’s order records the fund’s most recent asset mix: 78.72 percent Bitcoin, 11.10 percent Ether and 4.97 percent XRP, with the remaining allocation spread across Solana, Cardano, Sui, Chainlink, Avalanche, Litecoin and Polkadot. Although the weightings are subject to monthly rebalancing, the Commission required that at least 85 percent of the portfolio remain in assets that already underpin other SEC-approved exchange-traded products, effectively capping the combined share of smaller altcoins at 15 percent.

Almost immediately after the Division of Trading & Markets issued its delegated approval, the Commission’s Office of the Secretary intervened. In a brief letter citing Rule 431 of the SEC’s Rules of Practice, Assistant Secretary Sherry R. Haywood notified NYSE Arca that “the Commission will review the delegated action” and that, “in accordance with Rule 431(e), the July 22 order is stayed until the Commission orders otherwise. The stay freezes the conversion process and leaves BITW in its current OTC-traded form.

The procedural whiplash drew immediate reactions from ETF specialists on X. Bloomberg analyst James Seyffart wrote, “We have approval of the Bitwise 10 Index fund — BITW — but just like Grayscale’s GDLC earlier this month, Bitwise has been stayed by either one or multiple commissioners. Meaning they cannot actually convert it into an ETF … yet.” Fellow analyst Nate Geraci called the episode a “bizarre situation,” arguing that both Bitwise and Grayscale “should be allowed to convert/uplist asap.”

The stay mechanism mirrors the Commission’s treatment of Grayscale’s Digital Large Cap ETF earlier in July, underscoring internal divisions over how quickly to expand US crypto-ETF offerings beyond single-asset products. Because Rule 431 reviews are discretionary and open-ended, there is no statutory deadline for the Commission to lift the pause or issue a final ruling. Historically, reviews can take anywhere from a few weeks to several months; during that window the approval order carries no legal effect.

Related Reading: Analyst Warns XRP Investors About Banks, Here’s Why

Market participants are fixated on two questions. First, whether the inclusion of XRP — long a flash point in the SEC’s crypto enforcement agenda — influenced one or more commissioners to seek additional scrutiny. Second, whether the Commission will use the review to impose new conditions on multi-asset crypto ETFs, such as stricter custody, pricing or surveillance standards.

While the stay has no immediate impact on BITW shareholders, Bitwise has argued that an NYSE-listed ETF WOULD tighten spreads, eliminate premium-discount dislocations and broaden distribution through brokerage platforms that refuse to handle OTC products. In its submission the company also contended that regulated exchange trading “will enhance transparency and investor protection” by subjecting the shares to the consolidated tape and the Exchange Act’s reporting framework.

For now, the fund’s fate rests with a Commission that is visibly wrestling with the speed at which to open the US market to diversified crypto exposure. Until the review concludes, investors eager for a regulated vehicle that bundles Bitcoin, Ether, XRP and other large-cap altcoins will have to wait — or continue relying on OTC trusts that lack the structural safeguards of an ETF.

At press time, XRP traded at $3.349.