Asset manager Canary Capital appears to be on the verge of approval for its Litecoin and HBAR exchange-traded fund (ETF) after submitting key final details, but it is unlikely to launch during the US government shutdown.
Canary on Tuesday submitted amendments to its Litecoin (LTC) and Hedera (HBAR) spot ETFs, adding a 0.95% fee and tickers LTCC and HBR, respectively.
Bloomberg ETF analyst Eric Balciunas said in an X post on Tuesday that additions are “typically the last thing to be updated (before) market hours.”
He added that with the U.S. government shut down and the Securities and Exchange Commission largely in the dark, it’s unclear when it will be approved, but the filing “looks pretty complete to me.”
Bloomberg ETF analyst James Seifert also believes the correction is a good sign that it will be approved. “It feels like Litecoin and the HBAR ETF are reaching the finish line here.”
Analysts at crypto exchange Bitfinex predicted in August that the approval of altcoin-linked ETFs could spark a new altcoin rally as investors open up to the tokens.
Fees are higher than spot Bitcoin ETFs, but “pretty normal”
Spot Bitcoin ETF fees average between 0.15% and 0.25%, according to Ledger, which is much higher than Canary’s 0.95% fee, but Balciunas said that’s not unusual.
“My view on the 95bp fee. It is expensive compared to spot BTC, but it is quite normal for niche areas to have higher fees when they are new to ETFs,” he said.
But he also noted that if the LTC and HBAR ETFs receive reasonable flow and interest from investors, other issuers could seek to reduce the value of the canary and compete with cheaper products.
Publisher ‘Spaghetti Cannon’ issues 3x more ETFs despite shutdown
The U.S. government may be shut down, but companies are still applying for new ETFs, especially funds with 3x leverage, Balchunas and Seifert said.
A 3x ETF is a fund that tracks a variety of assets, such as stocks, and applies leverage to generate 3x daily or monthly returns. The SEC has rejected or disapproved highly leveraged crypto ETFs in the past, citing investor protection concerns related to volatility and complexity.
ETF issuer Tuttle Capital has filed for 60 new 3x ETFs. Another ETF issuer, GraniteShares, has also submitted a series of ETF applications holding various assets including Bitcoin (BTC) and Ether (ETH). ProShares also joined the fray with numerous applications.
Balciunas estimated there were close to 250 applications for the 3x ETF, and said issuers are “spaghetti cannoning” so many applications at once because “they’re making money.”
“Degens are hungry and insensitive,” he added. “A powerful combo in capitalism.”
Balchunas explained that these ETFs use swaps to create 2x leverage, but then “use options to go for an additional 1x.”
ETF approvals remain stalled due to government shutdown
The crypto industry is set to be flooded with new crypto ETFs in October, with the U.S. Securities and Exchange Commission expected to make final decisions on 16 crypto ETFs this month.
Related: Altcoin ETFs face decisive October as SEC adopts new listing standards
New listing standards were also announced in September, potentially speeding up approval of spot crypto ETFs by eliminating the need to evaluate each application individually and shortening approval timelines.
The government shutdown that began on October 1st has left everything in limbo, with no action taken even after the deadline passed. On the same day as the closure, the SEC announced that it would continue to operate with reduced staffing.
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