The Securities and Exchange Commission (SEC) granted accelerated approval for Bitwise’s 10 Crypto Index ETF on July 22, only to reverse the decision hours later through a stay order.
The approved ETF would have tracked ten digital assets, including Bitcoin, Ethereum, XRP, Solana, Cardano, SUI, Avalanche, Litecoin, Polkadot, and others, with at least 85% of its allocation dedicated to previously approved components, such as Bitcoin and Ethereum.
A Pause or a No?
NYSE Arca received permission to amend its rules for listing the multi-asset fund before the Commission intervened.
Assistant Secretary Sherry Haywood issued a stay notice under Rule 431, stating that the Commission would review the delegated action taken by the Division of Trading and Markets.
The reversal occurred despite the SEC finding the proposal consistent with Exchange Act requirements for preventing fraudulent practices and protecting investors.
The dramatic policy flip comes as 72 crypto-related ETF applications await regulatory approval from providers including Grayscale, CoinShares, Franklin Templeton, and VanEck.
Bloomberg Intelligence assigns 95% approval odds for Solana, XRP, and Litecoin ETFs this year, while existing Bitcoin and Ethereum ETFs continue attracting billions in institutional inflows.
Ethereum ETFs recorded $533.87 million in net inflows on July 22, marking the third-largest single-day inflow since inception, while Bitcoin ETFs experienced $67.93 million in outflows.
Regulatory Confusion Emerges as Multi-Asset Approval Process Stalls
The Bitwise 10 Crypto Index ETF approval represented a major expansion beyond existing Bitcoin and Ethereum products, with holdings weighted by market capitalization and monthly rebalancing.
As of June 30, Bitcoin comprised 78.72% and Ethereum 11.10% of the proposed fund, with the remaining eight cryptocurrencies making up the rest.
The SEC’s accelerated approval process typically applies to non-controversial rule changes that align with existing regulations.
The Commission found Bitwise’s 85% allocation requirement for previously approved components to be sufficient to mitigate fraud and manipulation risks, consistent with prior 80% thresholds for similar products.
NYSE Arca’s rule amendments would have allowed Trust Units issued by limited liability companies and explicitly permitted index-based investments.
The changes included conforming corporate governance policies and eliminating shareholder meeting requirements, aligning with existing treatment of investment vehicles.
The Division of Trading and Markets took the initial approval action under delegated authority before senior Commission officials intervened with the stay order. The reversal suggests disagreement within the SEC about multi-asset crypto product approvals despite technical rule compliance.
Coinbase Custody Trust Company would have served as a digital asset custodian, while Bank of New York Mellon provided cash custody and administration services. The ETF structure included cash-based creation and redemption in 10,000-share units, with daily net asset value calculations using CF Benchmarks pricing data.
Institutional Demand Surges Despite Regulatory Uncertainty
Existing crypto ETFs continue to experience massive institutional adoption despite regulatory confusion.
Ethereum ETFs have attracted $8.32 billion in cumulative inflows since their inception, with BlackRock’s ETHA leading Tuesday’s surge with $426.22 million. The fund now manages over $10 billion in assets, representing 2.24% of Ethereum’s circulating supply.
Bitcoin ETFs hold a total of $154.77 billion in assets, despite recent outflows, accounting for approximately 6.5% of Bitcoin’s market capitalization.
Grayscale’s GBTC recorded $7.51 million in inflows, while Ark Invest’s ARKB and Bitwise’s BITB experienced outflows exceeding $30 million each.
The pending ETF pipeline includes applications for Dogecoin, MELANIA, TRUMP, and other meme tokens alongside serious institutional products.
Most recently, 21Shares filed for an ONDO token ETF that tracks the native token of Ondo Finance, a layer-1 blockchain designed for institutional finance and the tokenization of real-world assets.
Grayscale’s Digital Large Cap Fund conversion to ETF status faced similar approval-then-uncertainty patterns, with speculation mounting about potential stays.
The fund holds Bitcoin, Ethereum, Solana, XRP, and Cardano, with allocations of 79.9% to Bitcoin and 11.3% to Ethereum.
SEC Chairman Paul Atkins has established a crypto task force to develop clear rules following years of “regulation by enforcement” under Gary Gensler.
March decisions on multiple altcoin ETFs were delayed until October, with the Commission citing a need for “longer periods” to consider proposed rule changes despite relatively high approval odds from analysts.
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