Bitwise 10 Crypto Index Fund Approved to Convert into ETF – Analysis

The U.S. Securities and Exchange Commission (SEC) has approved the conversion of the Bitwise 10 Crypto Index Fund (BITW) into an exchange-traded fund (ETF), signaling further regulatory openness to multi-asset digital products. This ETF will hold Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Solana (SOL), Cardano (ADA), Sui, Chainlink (LINK), Avalanche (AVAX), Litecoin (LTC), and Polkadot (DOT). This Market Insights explores five dimensions—approval background, conversion process, component assets and weights, market impact, and outlook—to give readers a comprehensive view of this industry milestone.

Summary:The Bitwise 10 Crypto Index Fund has been approved to convert into an ETF encompassing ten major digital assets. This reflects the SEC’s easing stance on multi-asset crypto products and may draw more traditional capital into crypto, prompting index providers to deepen product offerings.

Approval Background: SEC & Evolution of Crypto Regulation

Since Canada’s first Bitcoin ETFs in 2021, U.S. regulators have gradually become more accommodating. In 2025, the SEC green-lit single-asset Bitcoin and Ethereum ETFs, making multi-asset indices the next frontier. Crypto Briefing reports that the SEC approved Bitwise’s conversion request this week, then briefly paused it under internal Rule 431 review—yet the overall signal remains clear: regulatory opening.

Conversion Process: Key Steps from Fund to ETF

Bitwise filed a Form 19b-4 under the Investment Company Act, requesting its closed-end index fund be restructured as an ETF. Core steps include:

1. Filing: Bitwise submitted the application in November 2024.

2. Accelerated Approval: The SEC’s Division of Trading and Markets granted “accelerated” status, reserved for urgent or innovative products.

3. Pause for Review: On the same day, Cointelegraph reports the SEC Assistant Secretary invoked Rule 431 to temporarily hold the approval pending full-commission decision.

4. Implementation: Once final approval is secured, fund shares will seamlessly convert into ETF shares without any action required by investors.

Component Assets & Weights: The Top Ten Digital Assets

The ETF will mirror the index fund’s current holdings and weights:

This allocation balances large-cap stability with high-growth potential.

Market Impact: Blending Traditional Capital and Crypto

1. Improved Accessibility
   ETF shares trade like stocks in brokerage accounts, lowering custody hurdles and potentially attracting pension funds and institutions.

2. Regulatory Signal
   Approving a multi-asset crypto ETF signals growing SEC tolerance and eases policy uncertainty.

3. Index Competition
   Bitwise will now compete with Grayscale, VanEck, ARK 21Shares, etc., driving fee compression and service enhancements.

4. Liquidity & Arbitrage
   Creation/redemption mechanisms enhance underlying asset liquidity. Price differentials between spot and ETF markets may spawn new arbitrage.

Outlook: The Future of Multi-Asset ETFs

• Product Differentiation: Expect sector- or theme-specific ETFs (e.g., DeFi, Layer-1, smart contracts).

• Fee Optimization: Scale benefits may allow Bitwise to lower fees and boost competitiveness.

• Regulatory Clarity: Rule 431’s application could streamline approval, cutting compliance costs.

• Cross-Border Listings: Following Canadian and European precedents, Bitwise may launch these ETFs in additional jurisdictions.

FAQ

1. What is an ETF?
   An ETF (Exchange-Traded Fund) is an open-end fund traded on an exchange, combining mutual fund diversification with stock-like liquidity.

2. When will the Bitwise 10 Fund convert?
   Preliminary SEC approval is complete; full commission sign-off is expected within weeks.

3. How does an ETF differ from the index fund?
   ETFs trade intraday, offer creation/redemption to minimize premium/discount, whereas index funds price once per day.

4. How to invest?
   After conversion, ticker BITW (or the new ETF symbol) will be tradeable via standard brokerages.

5. Will the holdings change?
   Bitwise rebalances monthly; asset weights may shift based on market-cap or strategy rules.

Key Takeaways

• Regulatory Milestone: SEC approves Bitwise 10 Fund → ETF, signaling crypto openness.

• Seamless Conversion: Accelerated approval & Rule 431 pause → no investor action needed.

• Top Ten Assets: ETF holds BTC, ETH, XRP, etc., balancing risk and return.

• Capital Inflow: Easier access may draw institutions, spurring product innovation.

• Future Watch: Thematic ETFs, fee cuts, cross-border launches.