Bitwise Crypto Index Fund Holding BTC, ETH, XRP To Convert Into ETF

The U.S. Securities and Exchange Commission has approved the accelerated conversion of the ten Bitwise crypto index fund into an exchange-traded fund (ETF). Despite the approval, a regulatory stay has delayed the ETF’s launch, drawing criticism from market analysts.

SEC Approval Granted for Bitwise Crypto Index ETF But Still Faces Hold

According to the SEC document, the ETF will track the Bitwise crypto index, which holds Bitcoin (78.72%), Ethereum (11.10%), and XRP (4.97%) among other top assets. Additional components include Solana, Cardano, SUI, Chainlink, Avalanche, Litecoin, and Polkadot. Coinbase Custody will hold the crypto assets, while BNY Mellon will manage cash and act as administrator.

To comply with SEC guidelines, at least 85% of the ETF’s holdings will consist of crypto assets already approved for exchange-traded products. This includes Bitcoin and Ethereum.

New tokens that have not been granted approval like the XRP or Solana are 15% of the fund’s portfolio. The fund will also readjust itself on a monthly basis to synchronize with rebalancing of this crypto index fund.

The framework for the Bitwise crypto index fund permits issuance and redemption of shares in huge blocks, named Creation Units. This will make it operate identically to other crypto-based ETFs.

Despite the approval of the SEC, the order has already been stayed based on Rule 431(e). Hence, the ETF cannot launch until the Commission’s review is completed. The situation with the Bitwise crypto index fund mirrors the Grayscale Digital Large Cap ETF, which remains under similar review.

Geraci Calls SEC Delay ‘Bizarre’

Nate Geraci, president of The ETF Store, criticized the stay. He stated in an X post that “both of these should be allowed to convert/uplist asap” and called the situation “bizarre.”

Geraci emphasized that the regulatory delay contradicts the approval granted. He added that it leaves investors in uncertainty over products like the Bitwise crypto index fund.

Shares of the ten Bitwise crypto index fund currently trade over-the-counter. If the stay is lifted, the ETF will gain national exchange exposure, making it more accessible to retail and institutional investors. Last month, the SEC also delayed Bitwise’s Ethereum ETF staking proposal. Instead of a decision, the regulator launched a new review and sought public input.