The US Securities and Exchange Commission (SEC) has placed a sudden hold on Bitwise’s crypto index fund conversion into an exchange-traded fund (ETF), just hours after granting initial approval, sending the proposal into regulatory freeze as the agency conducts further review.
In a July 22 letter issued by SEC Assistant Secretary Sherry Haywood, the agency confirmed that the approval remains on hold pending further review by the full Commission, stating that the order “is stayed until the Commission orders otherwise.”
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.
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.
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.
