The U.S. Securities and Exchange Commission (SEC) has once again become a topic of discussion in the crypto community after it paused the approval of Bitwise's ETF.
Initial Approval, Then a Sudden Pause
On July 22, the SEC approved Bitwise's request to register its crypto index fund as a spot ETF on NYSE Arca under Rule 8.500‑E. The fund, which includes Bitcoin, Ethereum, XRP, Cardano, and several other major altcoins, was set to be the first diversified crypto ETF available to U.S. investors. However, shortly after, the SEC halted the approval without explanation, leading to confusion within the community.
XRP, ADA, and the Shadow of Uncertainty
The SEC’s hesitation appears related to the inclusion of XRP and ADA in Bitwise's fund. While Bitcoin and Ethereum already have approved ETFs, altcoins like XRP and Cardano remain in a regulatory gray area. Their presence in a multi-asset ETF could be seen as premature by the Commission, which likely aims to establish clear frameworks for these tokens before granting broader access.
A Repeat of the Grayscale Scenario
A similar situation recently occurred with Grayscale’s ETF, which was also paused following approval. The Grayscale fund includes XRP, ADA, and SOL, which likely triggered the SEC’s intervention. This pause raised concerns at Grayscale, and they indicated potential legal action, a response that may be echoed by Bitwise, given the lack of transparency behind the SEC's decisions.
All eyes are now on an anticipated SEC closed-door meeting later this week, which may also discuss the possibility of dropping its appeal in the Ripple case. A favorable decision there could pave the way for an XRP-specific ETF and consequently the approval of altcoin-inclusive index products like Bitwise’s. For now, Bitwise’s spot ETF remains in limbo, and the discussion on whether this is prudent regulation or a strategic delay continues.
