Asset manager Canary Capital may be just steps away from bringing the first-ever Litecoin (LTC) and Hedera (HBAR) spot exchange-traded funds (ETFs) to the United States market. However, the ongoing U.S. government shutdown is likely to stall the long-awaited approvals, even as the final filings appear to be complete.

On Tuesday, Canary submitted amendments to its Canary Litecoin ETF and Canary HBAR ETF, adding a 0.95% management fee and confirming their respective tickers: “LTCC” for Litecoin and “HBR” for Hedera.

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Bloomberg ETF analyst Eric Balchunas commented on X that such amendments are typically the “last step before go-time,” suggesting that the filings are effectively finalized. “They look pretty done to me,” he wrote, while adding that the Securities and Exchange Commission (SEC) remains mostly inactive due to the shutdown, leaving the timing of the launch uncertain.

Balchunas’ colleague James Seyffart echoed that sentiment, calling the updates a clear sign of progress. “It feels like Litecoin and HBAR ETFs are at the goal line here,” he said, hinting that regulatory approval could come soon after the government reopens.

Source: James Seyffart

If approved, Canary’s products would be the first altcoin spot ETFs in the United States outside of Bitcoin and Ethereum, potentially setting the stage for a new wave of altcoin-linked investment products. Analysts at Bitfinex have previously predicted that the approval of altcoin ETFs could act as a major catalyst for a renewed altcoin rally, expanding institutional exposure beyond the top two cryptocurrencies.

Source: Eric Balchunas

Canary’s Fees Higher, But Not Unusual

While Canary’s 0.95% annual fee is notably higher than the 0.15–0.25% range charged by most spot Bitcoin ETFs, Balchunas said this pricing is “pretty normal” for new or niche areas of the ETF market.

“My take on the 95bp fee — it’s pricey compared to spot BTC, but it’s common to see higher fees for new, untested areas that are riskier and harder to manage,” he explained.

Still, he noted that if Canary’s products attract meaningful inflows, other issuers may quickly enter the market and “undercut” with cheaper ETFs to gain competitive advantage.

ETF Issuers Keep Filing Despite Shutdown

Interestingly, the government shutdown hasn’t deterred ETF issuers from filing new applications. According to Balchunas, the industry is seeing an “avalanche” of leveraged 3x ETF filings, despite the SEC being largely offline.

ETF issuers Tuttle Capital, GraniteShares, and ProShares have all submitted new filings, including products tied to Bitcoin and Ether. Balchunas estimates there are now nearly 250 active 3x ETF applications, describing issuers’ approach as a “spaghetti cannon” — throwing multiple filings at once to see what sticks.

“These funds are extremely lucrative,” Balchunas said. “The degens are hungry and fee insensitive — a powerful combo in capitalism.”

Source: Eric Balchunas

Leveraged ETFs use swaps and options to amplify exposure to daily asset movements, often producing three times (3x) the return or loss of the underlying asset. However, the SEC has been cautious about approving high-leverage crypto ETFs, citing investor protection concerns due to volatility and complexity.

Shutdown Freezes SEC’s ETF Pipeline

The timing couldn’t be worse for crypto investors eagerly awaiting the next wave of ETF approvals. The SEC was scheduled to issue decisions on 16 crypto ETFs in October, including several staking-enabled Ethereum and altcoin funds.

The new listing standards introduced in September were expected to speed up the approval process by removing the need for case-by-case review. But since the October 1 shutdown, progress has stalled.

The SEC confirmed it would operate with “an extremely limited number of staff” until funding is restored, leaving ETF deadlines in limbo.

Despite the uncertainty, market optimism remains high. “Once the government reopens, the ETF floodgates could open too,” said one industry executive. “Canary’s filings are a signal of what’s next — altcoin ETFs are coming.”