SEC Halts Bitwise ETF: What’s the Surprise Reason?

1. SEC Unexpectedly Halts Approval of Bitwise Crypto ETF: What’s Going On?

The U.S. Securities and Exchange Commission (SEC) once again surprised the crypto world by suspending the approval of Bitwise’s 10 Crypto Index ETF—just hours after it had been greenlit by the Division of Trading and Markets. This sudden reversal has sparked growing concerns among investors, especially those backing multi-asset crypto ETFs holding Bitcoin, Ethereum, and XRP.

2. “Strange Situation”: SEC Blocks Another Crypto ETF Approval

The Bitwise ETF, designed to track a market-cap-weighted index of the top 10 cryptocurrencies (excluding stablecoins and wrapped tokens), was temporarily suspended shortly after its approval.

This marks the second time in July the SEC has invoked Rule 431 to stop an ETF from progressing, following a similar move against Grayscale’s Digital Large Cap Fund (GDLC), which also includes Bitcoin, Ethereum, and XRP.

3. What’s Going On Inside the SEC?

Under Rule 431, the full SEC Commission has the authority to review any decision made by staff under delegated powers. Once triggered, this rule automatically suspends approval without any required timeline for resolution or obligation to explain publicly.

This process leaves ETF issuers in a precarious position: approved by staff but blocked indefinitely by the Commission.

4. What Do Experts Say?

Nate Geraci, co-founder of The ETF Institute, called the move a "strange situation" and tweeted that both the Bitwise and Grayscale ETFs "should be allowed to list ASAP."

Grayscale responded strongly, warning that the delay has caused investors to "suffer harm" and hinted at potential legal action if the hold continues.

5. Why Is the SEC Still Hesitant?

During the public comment period, several critics raised concerns over:

 - Market manipulation risks in the crypto space

 - The reliability of cryptocurrency pricing data

 - Lack of surveillance-sharing agreements to protect investors

Despite increasing investor demand, the SEC remains cautious about broad-based crypto investment products.

6. Bitwise ETF: A Gateway to Diversified Crypto Exposure

The Bitwise 10 Crypto Index ETF aims to provide investors with diversified access to the broader digital asset market through a single exchange-traded product, to be listed on NYSE Arca under Rule 8.500-E.

If approved, it would mark a significant step toward mainstreaming crypto investment products within traditional financial markets.

7. Conclusion: Is Legal Action on the Horizon?

The SEC has not provided a timeline for its decision. But with pressure mounting from both issuers and investors, a legal showdown could be looming if delays continue.