- The SEC’s abrupt reversal on Bitwise’s ETF approval has raised doubts over internal processes.
- Delays and regulatory hesitations continue as the SEC reviews its approach to crypto-based ETFs.
The SEC permitted approval for the 10 Crypto Index Fund of Bitwise to convert into an exchange-traded fund (ETF) on July 23rd, only to put that approval on hold shortly afterwards. This action has garnered criticism as well as concerns about the agency’s internal procedure.
The ETF approval came under what is called “accelerated approval,” a process that allows Bitwise to pursue expedited recognition outside of a typical review period.
However, SEC Assistant Secretary Sherry Haywood issued a letter on the same day by delaying the decision, stating that the order is “stayed until the Commission orders otherwise” while a review is underway.
That leaves the fund, whose ticker symbol is BITW, stagnant. The fund is exposed to a variety of leading cryptocurrencies, including Bitcoin, Ethereum, XRP, Solana, Cardano, and many others.
One user speculates that the SEC is playing a game with the approval of Bitwise’s ETF. They approved Bitwise’s crypto ETF, then put it on hold, perhaps due to it including XRP and ADA, so it would end up with no stand-alone ETFs. The user poses a question as to whether it is a “political game or fair review.”
Bitwise ETF Conversion Blocked – SEC’s Pause Delays Decision
Bloomberg ETF analyst James Seyffart also confirmed on X that the stay does not allow Bitwise to move forward with the ETF conversion. “The Bitwise ETF has been ‘stayed by either one or multiple commissioners. Meaning they cannot actually convert it into an ETF…yet,’” he explained, also mentioning that a decision would not be made until next week.
Nate Geraci, president of NovaDius Wealth Management, called the situation “bizarre,” likening it to the Grayscale Digital Large Cap ETF conversion, which faced a similar approval followed by a pause on July 1.
Scott Johnsson, a general partner at Van Buren Capital, speculated that the approval might have been granted through delegated authority to avoid disruption by SEC Commissioner Caroline Crenshaw, the only Democrat on the panel. He also suggested that the pause could be a strategy to sidestep the 240-day statutory limit for ETF approval reviews.
Analysts Suspect Strategic Delay Behind SEC’s Pause
Eric Balchunas, an ETF analyst, suggested that the SEC may hold off on approving a set of uniform listing guidelines for all crypto-based ETFs. He said,
I think they want to put out their generic listing standards first, which is probably coming soon. Get comments. Implement in time [for]October due dates.
This is consistent with earlier reporting by Eleanor Terrett, which noted that the SEC is working with exchanges and fund managers to streamline the approval process for crypto ETFs. Part of that included making parts of the ETF application automatic, potentially saving on long 19b-4 filings in the future.
Meanwhile, the SEC also extended its decision deadline for Bitwise’s Bitcoin and Ether spot ETFs on July 17. That adds to the sense of regulatory hesitance surrounding crypto-related products, even when preliminary approval has already been issued.
Similarly, the SEC also delayed its decision on Bitwise’s Bitcoin and Ether spot ETFs on July 17. That is yet another indication of regulatory indecision regarding crypto-linked products, even if preliminary approval has been obtained.
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