Regulators Got Cold Feet, But Reddit Didn’t

PLUS: ETF reversals, XRP delays, and meme traders going deep fried on DNUT

Author

Cryptopolitan News
July 24, 2025 • Estimated Reading Time: 11 minutes

🧠 SEC reverses Bitwise crypto ETF approval amid rising altcoin scrutiny

The SEC made a surprising move this week: after initially approving the Bitwise 10 Crypto Index Fund’s conversion to a spot ETF, it halted the process hours later under internal review signaling renewed caution over altcoin exposure.

What happened?

On July 22, SEC staff in the Division of Trading and Markets approved the fund, trading under ticker BITW, to convert to an ETF on NYSE Arca. The fund would have offered U.S. investors a diversified portfolio of top cryptocurrencies — Bitcoin, Ethereum, XRP, Solana, Cardano, and others.

But Assistant Secretary Sherry R. Haywood immediately issued a stay under Rule 431(e), pausing the conversion and sending it to the full Commission for further review. This mirrors recent action on Grayscale’s Digital Large Cap Fund, which faced the same last-minute freeze earlier this month.

Why the sudden U-turn?

Analysts point to two main factors:

  1. Diverging views within the SEC — Market watchers suggest Commissioner Caroline Crenshaw, known for her caution on crypto, may have triggered the pause. Van Buren’s Scott Johnsson called it “funny business,” hinting at political pushback.

  2. Need for standardized ETF rules — Bloomberg’s Eric Balchunas and James Seyffart believe the SEC is drafting comprehensive listing rules to shorten the current 240-day Form 19b-4 process.

Why this matters

  • Investor confidence shaken — These late-stage reversals erode trust and inject uncertainty into crypto ETF timelines.

  • Altcoins delayed — Funds including assets beyond BTC and ETH face more scrutiny and unpredictable outcomes.

  • Political crosswinds — Amid Republican crypto-support and Democratic caution, the SEC is navigating a politically fraught policy landscape.

What’s next?

  • The full Commission must re-vote on the Bitwise conversion

  • The SEC is drafting new ETF listing standards, likely by this fall

  • Pending decisions include altcoin ETFs for Solana, Litecoin, XRP, and others but the final green light may now come post-standardization

The bottom line

The SEC's sudden reversal is less a rejection than a signal of regulatory outcome uncertainty. Spot Bitcoin and Ethereum ETFs have cleared the bar, but multi-asset crypto funds face a new hurdle altcoin review and procedural alignment.

For crypto-linked funds and investors, this pause is a reminder: progress is real but not yet irreversible, and still bound by regulatory and political checks.

Arkham clarified that the U.S. government still holds at least 198,000 BTC across multiple agencies after the U.S. Marshals Service revealed in an FOIA request that it only holds 28,988 BTC.

📈 Market Watch

Just when you thought meme stocks were a thing of the past, WallStreetBets is back and it’s not GameStop or AMC leading the charge.

This week, Reddit traders turned their attention to GoPro (GPRO) and Krispy Kreme (DNUT), pushing both stocks to double-digit gains in a matter of hours. GoPro soared nearly 50% at one point. Krispy Kreme jumped 35% after one user posted “60k DNUT YOLO” the night before.

🍩 A trader flipped $100K into a $45K profit in under an hour.

The meme stock formula hasn’t changed:

  • Find stocks with heavy short interest

  • Buy en masse

  • Force hedge funds to unwind positions

But the targets have. GPRO and DNUT are part of a new wave called the “DORK” stocks — short for DNUT, OPEN, RKLB, and KSS — all trading under $20 with heavy short exposure.

Why it matters

What’s happening isn’t just Reddit antics it’s a barometer for how much retail appetite for risk has returned.

  • Retail traders have pumped $155 billion into U.S. stocks and ETFs so far in 2025 — more than the height of the 2021 meme stock bubble.

  • The S&P 500 is at record highs, fueling confidence.

  • Meme frenzies are rotating into fresh names, away from exhausted plays like GameStop and AMC.

This isn’t nostalgia it’s a reset.

Meanwhile, in crypto equities...

Galaxy Digital (GLXY) is getting real Wall Street attention. Jefferies just gave it a Buy rating with a $35 target citing its pivot from crypto mining to AI infrastructure as a big upside.

  • Galaxy’s Helios facility in Texas now supports AI compute workloads

  • Tied to demand from firms like CoreWeave

  • Jefferies sees this as a “picks-and-shovels” play for both crypto and AI

Galaxy rose +6% on Tuesday and gained further in pre-market trading a quiet reminder that not all bets in this market are loud.

TL;DR

  • Reddit is back, and this time it's Krispy Kreme vs hedge funds

  • Retail money is flooding in, signaling high risk-on sentiment

  • Crypto-linked stocks like Galaxy are quietly winning institutional backing

  • The market may look euphoric, but beneath it are real rotations — some speculative, some structural

Ethereum’s validator exit queue has clocked its highest level in more than a year, with more than 625,000 ETH, worth roughly $2.3 billion.

⚖️ Regulation Watch

Two years after its implosion shook the crypto world, FTX is finally releasing another round of customer payouts and this one’s big. The exchange, through its Recovery Trust, will begin distributing $1.9 billion on September 30, following a Delaware bankruptcy court’s approval.

But here’s the catch:
Only verified and approved claimants will see a dime.

What’s happening?

After months of legal wrangling, the court allowed FTX to reduce its “disputed claims reserve” from $6.5B to $4.3B, freeing up nearly $2B in cash. That money will now be used to compensate:

  • Class 5 (Customer Entitlement) claims

  • Class 6 (General Unsecured) claims

  • Approved Convenience claims (under $10K)

However, to be eligible, users must have completed full KYC, submitted any necessary tax forms, and registered with one of FTX’s appointed distribution partners: Kraken, BitGo, or Payoneer. The record date to qualify is August 15.

Fail to meet any of these conditions? You're out of this round.

Here’s what you should know:

✅ If your claim is approved and all paperwork is done, you’ll get paid.

❌ If your claim is transferred and not finalized before Aug 15 — you’re not included.

🧾 If you haven’t completed KYC, tax setup, or platform registration — no payout.

FTX emphasized that once funds are transferred to your designated provider, they’re no longer responsible for what happens next.

“Individuals are solely responsible for their own funds,” the exchange stated.

Why it matters

This is one of the largest distributions so far from the FTX estate — but it’s also a test of how crypto bankruptcies will handle mass retail payouts. With over 2 million creditors involved globally, even small mistakes could cost people months more of waiting.

The broader takeaway? In crypto collapses, the survivors aren’t just the patient ones, they’re the organized ones. This isn’t just about how much you lost. It’s about whether you filed the right form on time.

Lawsuit against Pump.Fun expands to include Solana Labs, Solana Foundation, Jito, and key executives like Yakovenko and Gokal.

When Grok needs smart crypto takes, it taps us. 

We’re proud to be fuelling the Web3 ecosystem with signal—not noise. Curious what the hype’s about? You know where to find us! Follow @CPOfficialtx

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