The U.S. Securities and Exchange Commission (SEC) has approved the conversion of Bitwises cryptocurrency index fund.

However, the agency later issued a stay order halting the launch pending further internal review.

Regulator Issues Second Reversal This Month

A July 22 filing shows that the SEC had granted an accelerated approval for Bitwise’s proposal to convert its Bitwise 10 Crypto Index Fund (BITW) into a spot exchange-traded fund (ETF). In what Bloomberg ETF analyst Nate Geraci referred to as a “bizarre situation,” the regulator then later put the action on hold.

This letter is to notify you that, pursuant to Rule 431 of the Commission’s Rules of Practice, 17 CFR 201.431, the Commission will review the delegated action, read the document.

Notably, it marks the second time this month that the financial watchdog has intervened to block such a request. The SEC also stopped the launch of Grayscale’s mixed crypto ETF. That product had received initial approval from the Division of Trading and Markets, but was later stayed by the Commission under the same provisions.

These back-to-back reversals have gotten criticism from analysts. In a Tuesday X post, Geraci insisted, Both of these should be allowed to convert/uplist ASAP.

The ETF was set to trade on NYSE Arca as a “Trust Unit”  and includes a mix of top cryptocurrencies: Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL), Cardano (ADA), Chainlink (LINK), SUI, Avalanche (AVAX), Polkadot (DOT), and Litecoin (LTC). However, until the order is lifted, BITW shares will remain available only over-the-counter.

Under Rule 431, the SEC can independently review any decision its staff makes under delegated authority. Once invoked, the regulator automatically suspends the decision until it determines whether to uphold, amend, or reverse it. Further, there isn’t a required timeline for this process.

Bitwise currently manages approximately $5.79 billion in assets across its 12 crypto ETFs. The firm’s largest product is its spot Bitcoin ETF, which accounts for roughly $4.79 billion in AUM, while its Ethereum product holds an additional $431 million.

Experts Weigh In

Scott Johnsson, general partner at Van Buren Capital, and Bloomberg Intelligence ETF analyst James Seyffart shared their views on X regarding the SEC’s decision to stop these investment products from going live.

Johnsson suggested that the agency may have approved the conversion with the knowledge that Commissioner Caroline Crenshaw, who has been critical of crypto, would later intervene, or that the timing was aligned with the deadlines of both proposals.

“Both explanations are the kind of funny business that shouldn’t really be happening under Atkins,” he wrote.

Seyffart agreed, suggesting the SEC was probably stalling for time as it worked on finalizing its generic listing standards due by October 2025.