Asset manager Canary Capital appears to be on the cusp of having its Litecoin and HBAR exchange-traded funds (ETF) approved after filing key final details, but they’re unlikely to launch while the US government is shut down.
Canary filed amendments to its Litecoin (LTC) and Hedera (HBAR) spot ETFs on Tuesday, which each added a fee of 0.95% and the tickers LTCC and HBR.
Bloomberg ETF analyst Eric Balchunas said in an X post on Tuesday that the additions are “typically the last thing updated [before] go-time.”
He added that with the US government shut down and the Securities and Exchange Commission largely dark, it’s unknown when they’d be approved, but the filings “look pretty finalized to me.”
Fellow Bloomberg ETF analyst James Seyffart also thought the amendments are a good sign that an approval would happen and said it “feels like Litecoin and HBAR ETFs are at the goal line here.”
Source: James Seyffart
Analysts from the crypto exchange Bitfinex predicted in August that the approval of altcoin-tied ETFs could spark a new altcoin rally, as the product would open up investors to the tokens.
Fees higher than spot Bitcoin ETF, but “pretty normal”
Spot Bitcoin ETFs fees average between 0.15% and 0.25%, according to Ledger, far more expensive than Canary’s 0.95% fees, but Balchunas said that is not out of the ordinary.
“My take on the 95bp fee. It’s pricey vs spot BTC, but pretty normal to see higher fees for areas that are new to being ETF-ed and increasingly niche,” he said.
Source: Eric Balchunas
However, he also noted that if the LTC and HBAR ETFs attract decent flows and interest from investors, other issuers could try to undercut Canary and compete with cheaper products.
Issuers’ “spaghetti cannon” 3x ETFs despite shutdown
The US government might be in shutdown, but companies are still filing for new ETFs, according to Balchunas and Seyffart, with a focus on funds with 3x leverage.
A 3x ETF is a fund that tracks a wide variety of assets, such as stocks, and applies leverage to gain three times the daily or monthly return. In the past, the SEC has rejected or failed to approve high-leverage crypto ETFs due to concerns about investor protection related to volatility and complexity.
ETF issuer Tuttle Capital filed for 60 new 3x ETFs. Another ETF issuer, GraniteShares, also submitted a batch of ETF applications holding a range of assets, including Bitcoin (BTC) and Ether (ETH). ProShares also entered the fray with a slew of filings.
Source: Eric Balchunas
Balchunas estimates there are close to 250 3x ETF filings, and said issuers “spaghetti cannon” so many at once because they “make good money.”
“The degens are hungry and fee insensitive,” he added. “Powerful combo in capitalism.”
Balchunas explained that such ETFs create a 2x leverage using swaps, but will then “use options to target an extra 1x.”
Goverment shutdown leaves ETF approvals in limbo
The crypto industry was set for a flood of new crypto ETFs in October, with the US Securities and Exchange Commission supposed to make their final decisions on 16 crypto ETFs throughout the month.
Related: Altcoin ETFs face decisive October as SEC adopts new listing standards
New listing standards were also announced in September, which could expedite spot crypto ETF approvals, as each application would no longer need to be assessed individually, reducing approval timelines.
The government shutdown, which began on Oct. 1, has left everything in limbo, with deadlines passing and no action taken. The SEC stated on the same day as the shutdown it would continue to operate but with a skeleton crew.
Magazine: Hong Kong isn’t the loophole Chinese crypto firms think it is
