- The SEC approved and then abruptly paused Bitwise’s crypto index fund ETF conversion, raising concerns about internal disagreements and regulatory strategy within the Commission.
- Analysts speculate the delay may be politically motivated or part of a broader plan to introduce new crypto ETF listing standards.
In an unexpected turn of events, the U.S. Securities and Exchange Commission (SEC) has approved , then swiftly paused, the conversion of Bitwise’s flagship crypto index fund into an exchange-traded fund (ETF), sparking speculation of internal conflict and political maneuvering within the Commission.
On Tuesday, the SEC’s Division of Trading and Markets granted “accelerated approval” for the Bitwise 10 Crypto Index Fund, allowing Bitwise to potentially fast-track its conversion into an ETF.
However, the optimism was short-lived. That same day, SEC assistant secretary Sherry Haywood issued a letter stating that the approval was “stayed until the Commission orders otherwise,” effectively halting the ETF conversion pending further review.
The Bitwise 10 Crypto Index Fund (trading under the ticker BITW) includes exposure to major cryptocurrencies such as Bitcoin and Ethereum. Bitwise originally filed for the ETF conversion in November 2024, aiming to provide investors with a more accessible and regulated vehicle to gain diversified crypto exposure.
Analysts and industry observers were quick to weigh in on the strange sequence of events. Bloomberg ETF analyst James Seyffart noted via X (formerly Twitter) that the decision came earlier than expected, and the subsequent pause was likely due to objections raised by one or more SEC commissioners. “Meaning they cannot actually convert it into an ETF…yet,” Seyffart added.
Nate Geraci, president of NovaDius Wealth Management, described the situation as “bizarre,” likening it to the SEC’s earlier delay of Grayscale’s Digital Large Cap ETF conversion, which was approved and then frozen in a similar fashion. “Both of these should be allowed to convert/uplist ASAP,” commented Bloomberg’s Eric Balchunas, who suggested the Commission may be buying time to establish broad listing standards for crypto ETFs.
Adding fuel to the fire, Scott Johnsson of Van Buren Capital speculated that the initial approval was done under delegated authority to circumvent possible interference from Democratic Commissioner Caroline Crenshaw. Johnsson also floated the idea that SEC Chair Paul Atkins may be using the pause to bypass the standard 240-day deadline for ETF approval. “Both explanations are the kind of funny business that shouldn’t really be happening,” he stated.
In a broader context, the SEC has also extended its ruling timeline on in-kind redemptions for Bitwise’s Bitcoin and Ether spot ETFs. Reporter Eleanor Terrett recently revealed that the SEC, in collaboration with fund managers and stock exchanges, is exploring ways to streamline ETF approvals — including automation and reduced reliance on complex 19b-4 filings.
As the SEC navigates mounting political pressure and market demand for crypto ETFs, this latest pause on Bitwise’s application may point to deeper regulatory tensions. Whether it’s strategic delay or internal discord, the crypto investment world is watching closely — and waiting for clarity.
