SEC Backtracks After Approving New Crypto ETF, Raising Doubts About Regulatory Strategy
- Why Did the SEC Approve and Block Bitwise’s Crypto ETF on the Same Day?
- Is the SEC’s Delay Tactics Becoming a Pattern?
- Could a New Regulatory Model Streamline ETF Approvals?
- Are Critics Right About the SEC’s “Delegated Authority” Gambit?
- What’s Next for Crypto ETFs?
The U.S. Securities and Exchange Commission (SEC) has once again left the crypto market in suspense. Just hours after approving the conversion of Bitwise’s 10 Crypto Index Fund into an ETF, the SEC issued a stay order, halting the listing process. This isn’t the first time—similar delays have plagued other crypto ETFs, sparking criticism and speculation about the SEC’s regulatory tactics. Analysts suggest the agency may be buying time to finalize a broader framework for digital asset ETFs. With multiple applications pending, including funds tied to Solana and XRP, the SEC faces mounting pressure to clarify its stance by October.
Why Did the SEC Approve and Block Bitwise’s Crypto ETF on the Same Day?
In a head-scratching move, the SEC’s Division of Trading and Markets greenlit Bitwise’s request to convert its over-the-counter (OTC) fund into an ETF on July 22, 2025—only for the agency’s Office of the Secretary to slam the brakes hours later with a stay order. The Bitwise 10 Crypto Index Fund, launched in 2017 and managing $1.68 billion, holds a mix of Bitcoin (73.8%), ethereum (13.8%), and XRP (6.5%), with smaller allocations to Solana, Cardano, and others. Had the conversion gone through, it would have traded under NYSE Arca’s Rule 8.500-E, a milestone for crypto’s integration into traditional ETF structures.
Is the SEC’s Delay Tactics Becoming a Pattern?
Bitwise isn’t alone. Earlier in July, the SEC approved Grayscale’s Digital Large Cap Fund (GDLC) for ETF conversion—then suspended it the next day. Grayscale argued the approval was legally binding due to the SEC’s expired review window, but the agency disagreed. Bloomberg analyst James Seyffart suspects these moves are deliberate: “This might be the SEC’s way of stalling until they finalize a framework for digital asset ETFs.” Translation: they’re kicking the can down the road while figuring out which cryptos qualify and under what criteria.
Could a New Regulatory Model Streamline ETF Approvals?
Rumors suggest the SEC is drafting rules that would let asset managers register crypto ETFs more efficiently—no more piecemeal approvals. Instead, firms could file Form S-1, endure a 75-day review, and list if cleared. This could unlock a backlog of ETFs tied to Bitcoin, Ethereum, and even Solana. But until then, the waiting game continues.
Are Critics Right About the SEC’s “Delegated Authority” Gambit?
Financial lawyer Scott Johnsson accuses the SEC of exploiting procedural loopholes. By using “delegated authority” to pause approvals, the agency avoids outright denials and skirts its 240-day review deadline. Oddly, this regulatory whiplash persists despite the SEC’s supposedly pro-crypto leadership. As Johnsson tweeted: “What’s going on at the SEC?”
What’s Next for Crypto ETFs?
All eyes are on October, when the SEC must decide on pending ETFs, including multi-asset funds. If the stop-and-go approvals continue, institutional confidence in the process could crumble. For now, the crypto world watches—and waits.
FAQs
Why did the SEC halt Bitwise’s ETF after approving it?
The SEC’s stay order suggests internal disagreements or a strategy to delay until broader crypto ETF rules are finalized.
Which cryptocurrencies are in Bitwise’s fund?
Bitcoin dominates (73.8%), followed by Ethereum (13.8%), XRP (6.5%), and smaller holdings like Solana and Cardano.
When will the SEC clarify its stance on crypto ETFs?
Analysts expect decisive action by October 2025, given the pileup of pending applications.
