SEC Halts Bitwise 10 Crypto Index Fund Conversion Just Hours After Greenlighting It

Regulators giveth, and regulators taketh away. The SEC slammed the brakes on Bitwise's crypto ETF conversion mere hours after approval—because nothing says 'efficient markets' like bureaucratic whiplash.

Here's what went down:

The fund: Bitwise 10 Crypto Index Fund, a basket of top digital assets designed for institutional investors.

The whipsaw: SEC approved the conversion to an ETF, then mysteriously stayed its own decision before markets could react.

The irony: This comes as Bitcoin flirts with new all-time highs, proving once again that crypto moves faster than legacy systems can handle.

The takeaway? Wall Street wants in—but the suits still can't decide whether to embrace innovation or protect their antiquated monopoly.

What is the Bitwise 10 Crypto Index ETF?

The Bitwise 10 Crypto Index Fund, launched in 2017 and trading under the ticker BITW, is designed to track the performance of the ten largest crypto assets, excluding stablecoins and wrapped tokens. 

The fund rebalances monthly and, as of June 2025, held nearly 90% of its portfolio in Bitcoin and Ethereum. Other holdings included XRP, Solana, Cardano, Chainlink, Avalanche, Litecoin, and Polkadot.

Bitwise’s goal was to convert BITW from an over-the-counter product into a regulated ETF, allowing broader investor access and potential fee reductions.

The approval would have permitted NYSE Arca to list shares of the Bitwise 10 Crypto Index ETF.

According to the SEC’s order, the fund met key conditions, including holding at least 85% of its assets in digital commodities that already serve as the primary holdings of approved ETFs, such as bitcoin and Ethereum.

Bitwise’s goal was to convert BITW from an over-the-counter product into a regulated ETF, allowing broader investor access and potential fee reductions.

Why did SEC issue the stay order?

This is not the first time the SEC has taken such action. On July 1, the Commission’s Division of Trading and Markets approved Grayscale’s request to convert its Digital Large Cap Fund (GDLC) into an ETF. 

Just one day later, the Commission stayed the decision using the same Rule 431 process. Like BITW, GDLC holds a mix of Bitcoin, Ethereum, XRP, Solana, and Cardano.

The repeated use of Rule 431 to halt staff-level approvals has caused frustration among issuers, with Grayscale previously warning that the delay is harming investors. At the time, the issuer said it may consider filing a petition to force the regulator to allow its fund to begin trading as soon as possible.

Bitwise has not yet commented on the latest pause.

According to experts like Van Buren Capital’s Scott Johnsson, the SEC may have planned the reversals in advance, possibly anticipating opposition from Commissioner Caroline Crenshaw, who is widely known as a vocal crypto skeptic.

This is another crypto index ETP, and it's also been stayed pursuant to Rule 431 (same as Grayscale's Digital Large Cap) to review the delegated authority order. I have to wonder what is going on at the SEC. I can excuse GDLC as an unforeseen unilateral Crenshaw wrench, but this… https://t.co/92z37ZpaE8

On the other hand, Bloomberg Intelligence analyst James Seyffart speculated that the agency may be stalling as it finalises a unified framework for crypto ETFs.

“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,” Seyffart said in an X post responding to Jhonsson.

Nate Geraci, co-founder of The ETF Institute, has called the development a “bizarre situation” and has urged the regulator to swiftly “convert/uplist” the fund.

SEC delayed Bitwise’s Ethereum staking ETFs

The Commission is currently reviewing a plethora of ETFs tracking the prices of various cryptocurrencies, but it has also shown hesitation when it comes to more complex proposals, particularly those involving staking mechanisms.

On June 30, the SEC delayed its decision on Bitwise’s proposal to allow ethereum staking within a spot ETF structure. The agency instead opened the application to public comment, requesting feedback on whether staking rewards introduce risks that traditional ETFs are not equipped to manage.