Asset manager Canary Capital seems poised for approval of its Litecoin and HBAR exchange-traded funds (ETFs) after submitting important final details, but their launch may be delayed due to the US government shutdown.
Canary submitted amendments for its Litecoin (LTC) and Hedera (HBAR) spot ETFs on Tuesday, introducing a fee of 0.95% and tickers LTCC and HBR.
Bloomberg ETF analyst Eric Balchunas noted in a post on X that these adjustments are “usually the final updates [before] go-time.”
He emphasized that with the US government shutdown and the Securities and Exchange Commission largely inactive, the timeline for approval remains uncertain, yet the filings “appear quite finalized.”
Other Bloomberg ETF analyst James Seyffart echoed this optimism, suggesting the amendments indicate an imminent approval and commented that it “seems like Litecoin and HBAR ETFs are at the goal line.”
Analysts from Bitfinex projected in August that the approval of altcoin-linked ETFs could ignite a new altcoin rally, granting investors access to the tokens.
Higher fees compared to spot Bitcoin ETFs, but “fairly normal”
Spot Bitcoin ETFs typically incur fees between 0.15% and 0.25%, according to Ledger, making Canary’s 0.95% fees considerably higher, yet Balchunas stated that this isn’t unusual.
“Regarding the 95bp fee, it’s steep compared to spot BTC, but it’s common to see higher fees for emerging ETF sectors and more niche areas,” he remarked.
However, he also mentioned that if the LTC and HBAR ETFs draw substantial investment interest, competitors may attempt to undercut Canary with lower-cost products.
Issuers’ “spaghetti cannon” of 3x ETFs amid shutdown
While the US government may be shut down, companies continue to file for new ETFs, as noted by Balchunas and Seyffart, particularly those focused on funds with 3x leverage.
A 3x ETF is a fund that tracks various assets such as stocks and uses leverage to achieve three times the daily or monthly returns. The SEC has historically rejected or delayed high-leverage crypto ETFs due to concerns regarding investor protection amid volatility and complexity.
ETF issuer Tuttle Capital filed for 60 new 3x ETFs. Another issuer, GraniteShares, also submitted multiple ETF applications holding a diverse set of assets, including Bitcoin (BTC) and Ether (ETH). ProShares has also joined in with numerous filings.
Balchunas estimates that nearly 250 3x ETF filings exist, suggesting that issuers “spaghetti cannon” numerous applications at once because they “generate good profits.”
“The degens are eager and fee-insensitive,” he remarked. “A potent mix in capitalism.”
Balchunas clarified that these ETFs leverage to achieve 2x using swaps, then they will “employ options to target an additional 1x.”
Government shutdown hampers ETF approvals
The crypto sector anticipated a surge of new crypto ETFs in October, as the US Securities and Exchange Commission was expected to finalize decisions on 16 crypto ETFs during the month.
Related: Altcoin ETFs face decisive October as SEC adopts new listing standards
Fresh listing standards were introduced in September, designed to streamline the approval of spot crypto ETFs, eliminating the need for individual assessments of each application, which would shorten approval timelines.
The government shutdown, which commenced on Oct. 1, has created uncertainty, with deadlines unmet and no progress made. The SEC announced the same day that it would continue to function but with limited staff.
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