The U.S. Securities and Exchange Commission (SEC) has intervened to temporarily halt the conversion of the Bitwise 10 Crypto Index ETF, just hours after it was approved by staff. This is the second time this month that the SEC has blocked a staff-approved recommendation.
This move, along with the earlier case of the Grayscale Digital Large Cap Fund, has raised concerns among observers of the cryptocurrency ETF market. The halt suggests internal opposition to broader crypto products.
Nate Geraci, co-founder of The ETF Institute, called this a "strange situation," expressing that both funds should be allowed to convert/list as soon as possible. The halt was triggered under Rule 431, which allows the entire Commission to review any decision made by staff under delegated authority. When applied, this rule automatically suspends approval until the Commission decides to affirm, amend, or overturn that decision, without needing to provide public reasoning or a specific timeline.
This situation puts ETF issuers in a difficult position: approved by staff but indefinitely blocked by the Commission. Grayscale has warned that this delay is causing investors to "suffer losses" and could lead to legal action.
The Bitwise ETF is designed to track the market capitalization-based index of the ten largest crypto assets (excluding stablecoins and wrapped tokens), providing investors with diversified access to the digital asset market. Before the halt, public comments on the Bitwise ETF raised concerns about market manipulation risks and the reliability of crypto price data.
