The US Securities and Alternate Fee (SEC) has issued a keep order on Bitwise’s bid to transform its over-the-counter (OTC) crypto index fund right into a spot exchange-traded fund (ETF).
The choice got here simply hours after the SEC’s Division of Buying and selling and Markets granted accelerated approval for the applying on July 22.
The keep, issued by the SEC’s Workplace of the Secretary, briefly suspends the fund’s transition to ETF standing pending additional evaluation. If allowed to proceed, the Bitwise 10 Crypto Index Fund (BITW) would commerce on NYSE Arca underneath the amended Rule 8.500-E, which governs the itemizing of Belief Items.
Bitwise first filed its ETF conversion request in November 2024. The fund, launched in 2017, holds roughly $1.68 billion in property underneath administration.
As of July 22, Bitcoin accounts for 73.8% of the portfolio, adopted by Ethereum at 13.8% and XRP at 6.5%. Different constituents embody Solana, Cardano, Sui, Chainlink, Avalanche, Litecoin, and Polkadot in smaller proportions.
SEC’s sample of post-approval delays
The SEC’s newest transfer echoes the same sample noticed earlier this month.
On that event, the company authorized Grayscale’s request to transform its Digital Giant Cap Fund (GDLC) into an ETF, solely to subject a keep the next day. The GDLC additionally holds vital digital property like Bitcoin and Ethereum.
Grayscale responded by difficult the keep, arguing that the approval was computerized because of the expiration of the SEC’s statutory evaluation interval. The agency claimed the Fee lacked the authority to reverse a call successfully handed into legislation.
Bloomberg ETF analyst James Seyffart advised the SEC is perhaps deliberately delaying these approvals to finalize a broader regulatory framework.
Based on him:
“[This] is perhaps the SEC’s manner of stalling these items from changing into ETFs earlier than they give you a digital property ETF framework. AKA some kind of generic itemizing customary for what digital property are allowed in an ETF wrapper and what standards they’ll use.”
Based on experiences, the framework would enable issuers to now not have to file particular person rule-change requests if their tokens meet sure standards. As an alternative, sponsors would register with Kind S-1, bear a 75-day evaluation, and listing the product upon clearance.
In the meantime, finance lawyer Scott Johnsson supplied a unique interpretation of the repeated delays.
Based on him, the monetary regulator could possibly be intentionally utilizing the delegated authority to delay closing approvals, probably to keep away from penalizing candidates like Grayscale or to avoid the 240-day statutory evaluation interval.
However, the lawyer famous that these points shouldn’t happen underneath SEC Paul Atkins’s pro-crypto regime.
Contemplating this, Johnsson believes the uncertainty could possibly be resolved earlier than the October deadline, when a number of high-profile ETF functions are anticipated to face closing choices.
