The SEC initially gave the green light to a new crypto ETF, then hit the brakes. Let’s break it down.
A Multi-Asset Crypto ETF Gets the Nod…Then Halted
On July 22nd, the SEC fast-tracked approval for a new exchange-traded fund (ETF) called the Bitwise 10 Crypto Index ETF. This ETF isn’t just about Bitcoin and Ethereum; it also includes XRP, Solana, Cardano, and several other cryptocurrencies. The SEC’s decision stated the ETF met requirements to prevent fraud, ensure fair trading, and protect investors.
The fund, already trading over-the-counter (OTC) as BITW, was set to move to a major exchange. Its holdings were roughly: 78.72% Bitcoin, 11.10% Ether, 4.97% XRP, and the rest split between other altcoins. The SEC mandated that at least 85% of the ETF’s assets be in cryptocurrencies already in other approved ETFs.
The Sudden Freeze
But almost immediately after approval, the SEC’s Office of the Secretary put a hold on things. They announced a review of the decision, effectively freezing the ETF’s move to the exchange. This means BITW remains an OTC product for now.
This move surprised many, with analysts calling it a “bizarre situation.” It’s similar to what happened to Grayscale’s Digital Large Cap ETF earlier in July, highlighting internal disagreements within the SEC about how quickly to approve new crypto ETFs, especially those with multiple cryptocurrencies.
What’s Next?
The SEC’s review could take weeks or months. There’s no set timeline. Two big questions are:
- Did XRP’s inclusion cause the pause? XRP has been a point of contention for the SEC.
- Will the SEC add new rules for multi-asset crypto ETFs? This could include stricter rules about custody, pricing, or monitoring.
While the pause doesn’t directly affect current BITW investors, Bitwise argues that listing on an exchange would improve things like trading spreads and accessibility. For now, those wanting a regulated ETF with a mix of major cryptocurrencies, including XRP, will have to wait.
At the time of writing, XRP was trading at $3.349.