Just hours after staff gave it the green light, the SEC paused Bitwise’s approved crypto ETF.
The SEC halted another crypto index ETF approval on Tuesday, marking the second time this month that the commission intervened to block a staff-level recommendation.
This time around, the move affects Bitwise’s 10 Crypto Index ETF, which the SEC’s Division of Trading and Markets approved earlier in the day.
The twin reversals unsettled crypto ETF observers, especially those backing multi-asset funds. The pause suggests internal resistance to broader crypto products.
Nate Geraci, co-founder of The ETF Institute, tweeted on X Tuesday, “Both of these should convert or uplist ASAP,” characterizing the move as a “bizarre situation.”
The approval would have allowed NYSE Arca to list the fund as a “Trust Unit” under Rule 8.500-E, which governs asset-backed exchange-traded products, such as those holding commodities or cryptocurrencies.
But shortly after issuing the order, the SEC’s Office of the Secretary announced the full Commission would review the action under Rule 431, triggering an automatic stay.
Under the rule, the Commission can unilaterally review any decision staff make under delegated authority.
Once invoked, the approval automatically suspends until the Commission decides whether to affirm, modify, or overturn it. The agency requires no timeline and doesn’t need to provide a public explanation.
The pattern leaves other ETF issuers in an untenable position: staff approve them, but the Commission blocks them indefinitely.
Earlier this month, Grayscale’s Digital Large Cap Fund (GDLC) received staff approval to convert into a spot ETF, but the SEC stayed it days later under the same rule. The fund similarly holds assets like Bitcoin, Ethereum, and XRP.
A week later, Grayscale responded by warning that the delay caused investors to suffer harm and raised the possibility of legal action.
Meanwhile, the index ETF from Bitwise aims to track a market-cap-weighted index of the ten largest crypto assets, excluding stablecoins and wrapped tokens, according to the SEC’s approval order published on Tuesday.
It offers investors diversified exposure to the broader digital asset market through a single exchange-traded product.
Before approving and shortly after pausing it, public comments on Bitwise’s ETF cited market manipulation risks and the reliability of crypto market pricing data.. Some urged the SEC to reject the filing, arguing that underlying crypto markets remain prone to fraud and lack sufficient surveillance-sharing agreements to protect investors.
