SEC Halts Bitwise Crypto ETF Conversion After Initial Approval

The U.S. Securities and Exchange Commission abruptly paused Bitwise's plan to convert its 10 crypto Index Fund into an exchange-traded fund, just hours after granting preliminary approval. The regulatory freeze, announced in a July 22 letter from SEC Assistant Secretary Sherry Haywood, leaves the proposal in limbo pending further review by the full Commission.

Market analysts speculate the stay reflects strategic timing—a deliberate effort to delay crypto index fund conversions until the SEC establishes clear guidelines for digital asset ETFs. Such a framework WOULD define eligible cryptocurrencies and standardized listing requirements, potentially reshaping the landscape for institutional crypto products.

The reversal came swiftly after the SEC's Division of Trading and Markets had approved the conversion under accelerated procedures. Bloomberg ETF analyst James Seyffart noted the MOVE aligns with broader regulatory caution, suggesting the agency seeks to avoid piecemeal approvals before finalizing comprehensive rules.