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Asset manager Canary Capital appears poised to bring its Litecoin (LTC) and Hedera (HBAR) exchange-traded funds (ETFs) to investors, with filings now seemingly finalized. However, the US government shutdown has delayed any potential approvals, leaving the crypto community waiting.
The amendments filed by Canary added a 0.95% management fee and the tickers LTCC for Litecoin and HBR for Hedera. According to ETF analysts, these filings typically represent the final steps before approval, indicating that the products are ready to proceed once regulatory processes resume.
Analysts See ETFs at the “Goal Line”
Bloomberg ETF analyst Eric Balchunas noted on X that the filings are “typically the last thing updated before go-time.” Fellow analyst James Seyffart agreed, saying that it “feels like Litecoin and HBAR ETFs are at the goal line here.”
If approved, these spot ETFs could introduce significant new investment opportunities for Litecoin and Hedera. Industry observers, including analysts from Bitfinex, predicted that such products could stimulate a broader altcoin rally, as they provide easier access for institutional and retail investors alike.
Fee Structure and Market Dynamics
Canary Capital’s ETFs carry a 0.95% fee, which is higher than spot Bitcoin ETFs, usually ranging from 0.15% to 0.25%. Balchunas explained that the higher fees are typical for newer or niche assets being structured as ETFs.
“If the ETFs attract significant investor interest, competitors may try to undercut Canary with lower fees,” he noted, highlighting potential competition in the emerging altcoin ETF space.
The filings also reflect growing market demand for regulated altcoin investment products, showing that institutional interest is expanding beyond Bitcoin and Ethereum.
Surge in 3x Leveraged ETFs Despite Shutdown
Despite the government shutdown, companies are continuing to file for new 3x leveraged ETFs. These funds aim to multiply the daily or monthly returns of a basket of assets, such as stocks or cryptocurrencies, by three.
ETF issuers like Tuttle Capital and GraniteShares have filed multiple 3x ETF products, including funds that hold Bitcoin and Ether. ProShares has also entered the market with a large batch of filings.
Balchunas referred to this high-volume approach as the “spaghetti cannon” strategy, noting that issuers often file hundreds of products at once because they generate substantial fees and attract investors with high risk tolerance.
How 3x ETFs Work
These leveraged ETFs typically use swaps to achieve 2x exposure to the underlying assets and then apply options to target the remaining 1x leverage, creating a total of 3x exposure. While potentially lucrative, these products carry high volatility and complexity, which has historically led the SEC to scrutinize or reject them.
The current wave of filings demonstrates that demand for leveraged crypto ETFs remains strong, even amid regulatory uncertainty.
Government Shutdown Impact on ETF Approvals
The US government shutdown, which began on October 1, has left ETF approvals in limbo. The SEC, while operating with a skeleton crew, has delayed key decisions that were originally scheduled for October.
Previously, the SEC was expected to review 16 crypto ETFs this month, with new listing standards announced in September intended to streamline approvals. Under these standards, applications no longer need individual assessments, which could have accelerated approvals.
Now, Canary Capital’s LTC and HBAR ETFs, along with other pending crypto products, must wait until the government resumes full operations.
What This Means for Investors
Once regulatory conditions normalize, Litecoin and Hedera ETFs could attract significant flows, providing a regulated avenue for investors to gain exposure to these altcoins. Analysts suggest that approval of such ETFs may increase liquidity, enhance market credibility, and potentially influence altcoin performance.
Meanwhile, investors and market participants continue to monitor SEC movements closely, recognizing that the eventual clearance of these products could have broader implications for altcoin adoption and ETF innovation in the US market.
Conclusion
Canary Capital’s Litecoin and Hedera ETFs are effectively ready for approval, with filings finalized and fees set. Yet, the ongoing US government shutdown has delayed progress, leaving investors in a holding pattern.
The ETFs’ emergence reflects growing institutional interest in altcoins, while the parallel surge in 3x leveraged products indicates robust demand for crypto-related ETFs despite regulatory uncertainty. Once approvals resume, these ETFs may help shape the next phase of altcoin investment in regulated markets.
