- SEC halts Bitwise ETF approval just hours after green light.
- XRP included in paused ETF, raising investor frustration and concern.
- Regulatory inconsistency clouds future of spot-based crypto ETF approvals.
The XRP community was stirred on Tuesday after the U.S. Securities and Exchange Commission unexpectedly halted Bitwise’s 10 Crypto Index Fund conversion into an exchange-traded fund. Bitwise’s 10 Crypto Index Fund, which includes XRP, received initial approval for ETF conversion before being suddenly halted.
Shortly after the Division of Trading and Markets gave the green light, the SEC’s Office of the Secretary stepped in to stop the process. This triggered Rule 431, which grants the full Commission authority to pause staff-level decisions pending review.
Bitwise also intended to list the fund with NYSE Arca as a Trust Unit under Rule 8.500-E, which allows investors to gain exposure to a basket of the most popular cryptocurrencies. The product did not feature stablecoins and wrapped tokens but has incorporated significant assets like Bitcoin, Ethereum, and XRP.
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However, the SEC’s last-minute decision demonstrated the regulatory ambiguity involved in the approval of crypto funds, as Grayscale previously witnessed.
SEC Decision Casts Doubt on XRP Market Accessibility
According to ETF analyst Nate Geraci, the back-to-back halts appear “bizarre.” As he revealed on X, Bitwise and Grayscale had acted through the proper procedures before being left hanging with no apparent explanation.
In addition to the delay, the ruling also denies retail investors access to a variety of crypto assets in a regulated environment. Tokens such as XRP cannot be found in spot ETF form on most traditional investment platforms.
Also, the move has called into question general organizational coordination in the SEC. Staff units release approvals, which the Commission then trumps, creating uncertainty in the market.
Industry Reactions Point to Rising Frustration
The crypto investment community has expressed growing dissatisfaction with the SEC’s unpredictable stance on ETF approvals. Delays and reversals are making it difficult for firms to prepare products that meet compliance standards.
There are also concerns regarding the impact of such decisions on retail investors looking to diversify exposure. There is no obvious guide, and the availability of crypto in traditional financial markets is incredibly low.
Despite occasional signs of policy changes among the agency’s management by some insiders, the situation has also indicated that uncertainty remains the guiding force over crypto-related decisions.
The SEC’s sudden halt of Bitwise’s XRP-inclusive ETF conversion, following staff approval, has intensified concerns around regulatory consistency. With mounting similar delays, investors’ confidence in the process is strained.
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