XRP ETF Approval Halted: A Bizarre Situation Unfolds
The cryptocurrency market is currently grappling with a peculiar and unprecedented situation as the U.S. Securities and Exchange Commission (SEC) has approved, then almost immediately halted, a major multi-asset crypto Exchange-Traded Fund (ETF) that includes XRP. This high-profile development has sent ripples of confusion and suspense through the digital asset community, with experts labelling it a “bizarre situation.” On July 22, the SEC’s Division of Trading and Markets granted accelerated approval for a proposed rule change, which would have permitted NYSE Arca to list and trade shares of the Bitwise 10 Crypto Index ETF.
However, later the very same day, the SEC’s Office of the Secretary issued a stay on this approval, effectively putting the ETF’s launch on hold indefinitely. This abrupt reversal has left market participants questioning the regulatory process and the future of crypto ETFs, especially those featuring a diverse portfolio of digital assets like Bitcoin, Ether, and XRP. The incident underscores the ongoing complexities and uncertainties surrounding cryptocurrency regulation in the United States, highlighting the need for clearer and more consistent policy frameworks to foster market stability and investor confidence.
SEC’s Initial Accelerated Approval Detailed
The U.S. Securities and Exchange Commission (SEC) has approved a proposed rule change allowing NYSE Arca to list and trade shares of the Bitwise 10 Crypto Index ETF. The approval was granted under an amended Rule 8.500-E, a regulatory framework designed to facilitate the listing and trading of exchange-traded products. The ETF is structured to track the performance of the Bitwise 10 Large Cap Crypto Index, which comprises leading digital assets with their weighting determined by free-float market capitalisation. The SEC’s approval was seen as a positive step towards greater mainstream integration of digital assets, offering a regulated investment vehicle for a diversified crypto portfolio.
The Bitwise 10 Crypto Index ETF Portfolio
The Bitwise 10 Crypto Index ETF is a diversified investment scheme that focuses on the top digital assets, based on their free-float market capitalisation. As of June 30, 2025, the ETF’s portfolio is heavily influenced by Bitcoin (BTC), Ethereum (ETH), and XRP (XRP), with Bitcoin holding 78.72% and Ethereum 11.10%, respectively. Other prominent altcoins include Solana (SOL) and Cardano (ADA). The ETF mandates at least 85% of its holdings to be in approved assets by the SEC, with the remaining 15% permitted in other digital assets. Coinbase Custody Trust is the custodian for crypto assets, while The Bank of New York Mellon oversees cash and administrative operations. The Net Asset Value (NAV) is calculated daily using CF Benchmarks Ltd. pricing, ensuring transparency and accurate valuation.
The Immediate and Unexpected Stay Order
Despite the accelerated approval, the optimism surrounding the Bitwise 10 Crypto Index ETF was abruptly halted later on July 22. The SEC’s Office of the Secretary issued an immediate stay of the approval, citing Rule 431 of the Commission’s Rules of Practice. This rule, codified as 17 CFR 201.431, grants the Commission the authority to review delegated actions. The notification stated: “This letter is to notify you that, pursuant to Rule 431 of the Commission’s Rules of Practice, 17 CFR 201.431, the Commission will review the delegated action.
In accordance with Rule 431(e), the July 22, 2025 order is stayed until the Commission orders otherwise.” This unexpected move effectively put the ETF’s launch into an indefinite limbo, pending a full review by the entire Commission. The stay order highlights the SEC’s cautious and often unpredictable approach to cryptocurrency-related products, even after initial divisional approval. It underscores the internal complexities and potential disagreements within the regulatory body regarding the appropriate framework for digital asset investment vehicles, leaving markets in suspense about the ultimate fate of this and potentially other similar ETFs.
Precedent Set by Grayscale’s Similar Situation
The Bitwise 10 Crypto Index ETF’s approval was halted due to a similar incident with Grayscale, which sought to list and trade shares of its Digital Large Cap Fund under amended NYSE Arca Rule 8.500-E. The SEC’s Division of Trading and Markets granted accelerated approval, but the decision was stayed on the same day, pending a full Commission review. This recurring pattern suggests a broader internal process within the SEC where initial divisional approvals for complex crypto ETFs are subject to immediate, higher-level scrutiny. President of Novadius Wealth Management, Nate Geraci, expressed frustration and confusion, stating that both the Bitwise and Grayscale ETFs should be allowed to convert/uplist ASAP. This unusual and counterproductive regulatory approach has caused frustration and confusion among the industry.
Expert Reactions and Market Implications
The SEC’s decision to approve and halt the Bitwise 10 Crypto Index ETF has sparked strong reactions from industry experts, who view the situation as “bizarre” and detrimental to market clarity. The inconsistent regulatory actions create unnecessary uncertainty and impede the progress of legitimate crypto investment products. The immediate stay leaves markets in suspense, impacting investor confidence and potentially deterring institutional interest in similar offerings.
This regulatory ambiguity can lead to increased volatility as traders react to the shifting landscape. The situation raises questions about the internal coordination and decision-making processes within the SEC, as two separate divisions appear to operate under different interpretations of policy. The implications for the crypto market are significant, highlighting the need for clearer, more consistent, and predictable regulatory frameworks to foster a stable investment environment for cryptocurrencies like XRP.
The Future of Multi-Asset Crypto ETFs
The approval and subsequent halt of the Bitwise 10 Crypto Index ETF, particularly its inclusion of XRP, casts a shadow of uncertainty over the future of multi-asset crypto ETFs in the U.S. While the initial accelerated approval suggested a path towards broader acceptance of diversified crypto investment vehicles, the immediate stay indicates that significant regulatory hurdles remain. The SEC’s full commission review will be a critical determinant of whether such products can ultimately come to market.
The situation with Grayscale’s similar fund reinforces that this is not an isolated incident but potentially a systemic approach to complex crypto ETF applications. For XRP, specifically, its inclusion in such a mainstream ETF would have provided significant legitimacy and increased accessibility for institutional investors. The current limbo means that the market will continue to operate without this regulated exposure, potentially impacting capital inflows. The crypto industry will be closely watching the SEC’s final decision, as it will set a crucial precedent for how diversified digital asset products are treated under U.S. securities law, ultimately shaping the landscape for crypto investment for years to come.
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