tl;dr
Canary Capital's Litecoin and HBAR ETFs are inches from SEC approval, but the U.S. government shutdown has created regulatory chaos, leaving investors in limbo as fees, leverage products, and legal hurdles collide.
**Canary Capital’s Litecoin and HBAR ETFs Near Approval, But Government Shutdown Delays the Process**
Asset manager Canary Capital is close to securing regulatory approval for its Litecoin (LTC) and HBAR (Hedera) exchange-traded funds (ETFs), but the U.S. government shutdown has thrown the timeline into uncertainty. The firm recently filed final amendments for both ETFs, adding key details such as 0.95% management fees and ticker symbols “LTCC” for the Litecoin ETF and “HBR” for the HBAR ETF. Analysts suggest these updates are a strong signal that the products are nearing launch, though the SEC’s operational limitations due to the shutdown may delay approvals.
### Final Filing Steps, But Approval Remains Uncertain
On Tuesday, Canary submitted amendments to its spot ETF applications for Litecoin and HBAR, a step typically taken just before an ETF goes live. Bloomberg ETF analysts Eric Balchunas and James Seyffart noted that the filings appear “pretty finalized,” with Balchunas stating, “It’s typically the last thing updated [before] go-time.” However, the U.S. government shutdown, which began on October 1, has crippled the Securities and Exchange Commission (SEC), leaving its approval process on hold.
“The SEC is largely dark right now,” Balchunas said, adding that while the filings look complete, the timeline for approval remains unclear. Seyffart echoed this sentiment, calling the amendments a “good sign” and suggesting the ETFs are “at the goal line here.”
### Fees Higher Than Bitcoin ETFs, But Not Unprecedented
Canary’s 0.95% fee for both ETFs is significantly higher than the 0.15–0.25% fees typical for spot Bitcoin ETFs. However, Balchunas noted that such fees are “pretty normal” for newer or niche assets. “It’s pricey vs. spot BTC, but higher fees are expected for areas that are new to being ETF-ed,” he explained. He also warned that if the Litecoin and HBAR ETFs gain traction, other issuers may enter the market with lower-cost alternatives.
### A Surge in 3x Leveraged ETFs Amid Shutdown
Despite the regulatory uncertainty, ETF issuers are aggressively filing for new products, particularly high-leverage 3x ETFs. These funds use derivatives to amplify daily returns by three times, a strategy the SEC has historically been wary of due to risks associated with volatility and complexity.
Tuttle Capital, GraniteShares, and ProShares have all submitted applications for 3x leveraged ETFs, with Balchunas estimating nearly 250 such filings in total. He described the surge as an example of the “spaghetti cannon” approach—issuers flooding the market with products to capture investor demand. “The degens are hungry and fee-insensitive,” he said, highlighting the profitability of these high-risk, high-reward instruments.
### Government Shutdown Halts Crypto ETF Momentum
The crypto industry had anticipated a wave of ETF approvals in October, with the SEC set to finalize decisions on 16 crypto ETFs. New regulatory standards announced in September aimed to streamline approvals by allowing batch reviews. However, the government shutdown has stalled progress, with the SEC operating on a skeleton crew.
Analysts warn that the delay could disrupt the market’s momentum. Earlier this year, Bitfinex predicted that altcoin ETFs could trigger a rally by opening access to institutional investors. With approvals now in limbo, the crypto market remains in a state of anticipation.
### What’s Next?
As the government shutdown persists, the fate of Canary’s ETFs—and others—remains uncertain. While the SEC’s operational constraints are temporary, the broader implications for crypto innovation and investor access could be significant. For now, market participants are waiting for clarity, hoping that once the shutdown ends, the long-awaited ETF approvals will finally materialize.
In the meantime, the crypto ETF landscape continues to evolve, with issuers betting on both traditional and speculative products to capitalize on a volatile but rapidly growing market.