The Securities and Exchange Commission placed a stay on the Bitwise 10 Crypto Index Fund conversion to an exchange-traded fund despite approving the fund Tuesday, preventing the crypto product from launching until further notice.
The stay creates uncertainty around when the second diversified crypto ETF will reach U.S. markets, with the delay mirroring actions the SEC took against Grayscale Investment Trust’s Digital Large Cap Fund earlier this month.
Read More: SEC Delays Grayscale Crypto ETF Launch Despite Approval
The Bitwise fund tracks the Bitwise 10 Large Cap Crypto Index and holds Bitcoin at a 78.7% weighting, followed by Ethereum at 11.1%, according to Bitwise. The fund manages $1.4 billion in assets across 10 crypto holdings with a 2.5% expense ratio.
The SEC granted accelerated approval for the Bitwise fund to convert to an ETF trading on NYSE Arca, according to the filing. However, Assistant Secretary Sherry Haywood notified the exchange in a separate letter that the Commission will review the delegated action, automatically triggering a stay under Rule 431 of the Commission’s Rules of Practice.
The fund currently trades over-the-counter under the ticker BITW and has operated as a trust since November 2017, according to Bitwise. Public quotation began in December 2020 through the OTCQX market.
Beyond Bitcoin and Ethereum, the fund holds smaller positions in XRP at 5%, Solana at 3% and Cardano at 0.8%, according to the fact sheet. Additional holdings include SUI at 0.4%, Chainlink at 0.3%, Avalanche at 0.3%, Litecoin at 0.2% and Polkadot at 0.2%.
The approval order shows the fund must maintain at least 85% of its holdings in commodities that underlie Commission-approved exchange-traded products, with no more than 15% in other assets, according to the SEC filing. This structure mirrors requirements imposed on other crypto ETF approvals.
The stay prevents trading until the SEC orders otherwise, according to the letter from Haywood. The Office of the Secretary will notify the exchange of any action taken by the agency.
The delay follows a similar pattern to Grayscale’s Digital Large Cap Fund, which received approval and an immediate stay earlier this month. That fund tracks the CoinDesk 5 Index and holds $774.8 million in assets under management.