Regulator SEC overturns Bitwise's multi-crypto ETF acceptance in unexpected decision
SEC Delays Approval of Bitwise 10-Crypto Index Fund, Raising Regulatory Uncertainty
In a surprising turn of events, the United States Securities and Exchange Commission (SEC) has delayed the approval of Bitwise's 10-Crypto Index Fund conversion to an exchange-traded fund (ETF). This decision follows a similar incident involving Grayscale's Digital Large Cap ETF, where the SEC initially issued an approval before subsequently delaying implementation.
Nate Geraci, CEO of The ETF Store, has highlighted the unusual nature of these regulatory reversals. He commented, "The approval order for the Grayscale Digital Large Cap ETF, similar to the Bitwise ETF, was issued and then delayed."
The Bitwise fund offers a diversified portfolio that includes major cryptocurrencies such as Bitcoin, Ethereum, Solana, XRP, Sui, and Cardano. Its transition to ETF status would have marked a significant milestone in the evolution of crypto ETFs, moving beyond Bitcoin and Ethereum products.
Valentin Fournier, an analyst at BRN, emphasized the momentum building behind altcoin access. He stated, "The initial approval of the Bitwise ETF is seen as validation of growing institutional interest in diversified crypto exposure." Fournier also highlighted the timing significance, stating that the move aligns with ongoing capital rotation away from Bitcoin and into altcoins.
The regulatory uncertainty around crypto ETFs may continue to extend into 2025. The SEC is currently evaluating applications for various altcoin ETFs, including Solana and Dogecoin products. No decisions are expected before September-October 2025.
The SEC's suspension of the Bitwise ETF conversion could be part of a broader strategy to manage crypto ETF approvals while refining regulatory frameworks. Deputy Secretary Sherry R. Haywood confirmed the indefinite review under Rule 431.
The regulatory reversal has introduced fresh uncertainty into the market, particularly as altcoin interest appears to be gaining momentum. Broader ETF availability is likely to accelerate the trend of capital rotation towards high-quality digital assets. The altcoin season could be strengthened by the increased availability of multi-asset crypto products.
Despite the setback, the Bitwise fund represents a significant departure from the single-asset Bitcoin and Ethereum ETFs currently available to investors. The delay in approval may slow down the growth and adoption of crypto ETFs, but the interest in diversified crypto exposure remains strong.
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