In a surprise move, the Securities and Exchange Commission initially approved Bitwise's proposal to transform its Bitwise 10 Crypto Index Fund into a spot exchange-traded fund, only to promptly put the plan on pause. This sudden reversal has created fresh uncertainty surrounding the agency's standards for cryptocurrency ETFs.
The fund in question, which holds a significant portion of its assets in bitcoin and ether, also invests in other cryptocurrencies such as Solana, XRP, and ADA. With over $1.68 billion in managed assets, the fund is rebalanced on a monthly basis. Since its launch in 2017, the fund has maintained a steep expense ratio of 2.5%, although it is unclear whether this fee will remain in place if the conversion to a spot ETF is ultimately approved.
A similar product, Grayscale's Digital Large Cap Fund, also received initial approval before being put on hold by the SEC. The regulator's hesitation is likely due to the need to establish clear and consistent standards for cryptocurrency ETFs, particularly for tokens without standalone ETFs.
The SEC has been actively reviewing various ETF proposals, including those from Franklin Templeton and Fidelity, and has launched a review of the Canary Capital SUI ETF. Additionally, 21Shares has filed a proposal for an ETF tracking the ONDO token, which powers the Ondo Finance platform.