SEC Suspends Bitwise Spot Crypto ETF Under Full Review
US regulators have paused Bitwise’s conversion of its over-the-counter BITW fund into a spot crypto ETF, invoking Rule 431 for a full SEC Commission review hours after an initial clearance from the Division of Trading and Markets. The Bitwise 10 Crypto Index Fund ETF, designed to track the top ten digital assets (with about 90% exposure to Bitcoin (BTC) and Ethereum (ETH), alongside allocations in Solana (SOL), XRP (XRP) and Cardano (ADA)), now faces an uncertain listing timeline amid heightened scrutiny. This suspension echoes the recent halt on Grayscale’s GDLC ETF, underscoring regulatory uncertainty as the SEC seeks to refine its crypto ETF framework for investor protection and market integrity. Traders should brace for increased Bitcoin volatility and potential short-term ETF pricing and liquidity pressures, while keeping an eye on Bitwise’s resubmission and the SEC’s evolving stance, which will shape long-term institutional and retail access to regulated crypto ETF products.
Bearish
The SEC’s suspension of Bitwise’s spot crypto ETF conversion introduces fresh regulatory uncertainty, delaying institutional inflows that could have supported Bitcoin demand. Short-term trading volumes and ETF liquidity may face downward pressure, leading to increased volatility and potential price declines for BTC until the review concludes. Although long-term prospects for regulated crypto ETF products remain positive, the immediate market reaction is likely negative as traders assess the risk of further delays and tighter oversight.