SEC Greenlights Bitwise Crypto ETF – Then Abruptly Pulls the Plug in Stunning Reversal

Regulators giveth, and regulators taketh away.

The SEC just delivered crypto investors a whiplash-inducing rollercoaster—approving Bitwise's landmark spot Bitcoin ETF, only to slam the brakes hours later in a move that reeks of bureaucratic indecision.

From champagne to chaos in record time

Trading desks had barely finished popping corks when the 'approved' filing vanished from the SEC website. The sudden reversal left market makers scrambling—and reignited debates about the agency's crypto competence.

The compliance kabuki continues

Insiders whisper the about-face came after someone finally read past page one of the filing. Classic Washington—approve first, ask questions later. Meanwhile, Wall Street's blockchain gambit gets another delay courtesy of government efficiency.

One step forward, two blockchain confirmations back. The crypto revolution marches on—just at the SEC's glacial pace.

The letter from Haywood was released just hours after the SEC’s Division of Trading and Markets granted accelerated approval for Bitwise’s proposal to convert its 10 Crypto Index Fund into an ETF on Tuesday.

Bloomberg ETF analyst James Seyffart suggested in a post on X that the SEC’s decision to impose a stay may be a strategic move to delay crypto index funds from converting into ETFs until the agency establishes a broader framework. Such a framework WOULD likely define which digital assets qualify for inclusion in crypto ETF products and set consistent listing standards.

I agree with Scott here. Might be the SEC’s way of stalling these things from becoming ETFs before they come up with a digital assets ETF framework. AKA some sort of generic listing standard for what digital assets are allowed in an ETF wrapper and what criteria they’ll use. https://t.co/UIYrEi86x7

Seyffart compared the SEC’s action on Bitwise to its recent handling of Grayscale’s large-cap crypto ETF, which was similarly paused despite prior approval. Earlier this year, the Commission greenlit Grayscale’s conversion before unexpectedly issuing a stay order, offering no public explanation for the reversal.

We have approval of the @BitwiseInvest 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* https://t.co/e037clB0kI pic.twitter.com/GQEdtIscar

In a July 8 letter, Grayscale’s legal team questioned the SEC’s decision and argued that the SEC exceeded its authority, as the application had already been approved by the SEC staff prior to the stay.

The SEC’s decision adds another LAYER of uncertainty for asset managers and crypto investors awaiting clearer regulatory pathways. While the initial approval signaled a potential breakthrough for crypto-linked ETFs, the sudden reversal has once again left market participants on edge.

The MOVE emphasizes how fragmented and unpredictable the current approach to digital asset regulation remains, even for firms attempting to play by the rules. As stakeholders await a final ruling, the pause serves as a broader signal: until the SEC formalizes a comprehensive framework for digital asset products, even approved pathways may remain subject to abrupt shifts and reversals.

The question now is whether this signals a short-term delay or a more deliberate stall in crypto ETF progress.

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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.