Canary Capital Nears Approval for Litecoin and HBAR ETFs
Canary Capital is on the verge of receiving approval for its exchange-traded funds (ETFs) focused on Litecoin and HBAR. The firm has submitted its final paperwork, which includes important changes such as fee structures and ticker symbols. However, the launch of these ETFs is currently on hold due to a partial shutdown of the U.S. government. On Tuesday, Canary provided updates for its spot ETFs linked to Litecoin and Hedera, introducing a management fee of 0.95% alongside the ticker symbols LTCC for the Litecoin ETF and HBR for the HBAR ETF. Bloomberg analyst Eric Balchunas noted that such updates typically occur just before a launch, indicating readiness. However, the ongoing government shutdown and the SEC’s inactivity have left the timing of the funds’ approval uncertain, despite Balchunas asserting that the submitted documents appear to be finalized.
Higher Fees Compared to Bitcoin ETFs
While the average management fee for spot Bitcoin ETFs ranges from 0.15% to 0.25%, Canary’s proposed fee of 0.95% is notably higher. Eric Balchunas acknowledged this discrepancy, explaining that while it may seem steep compared to Bitcoin ETFs, such fees are often standard for newer and less mainstream assets. He suggested that if the Litecoin and HBAR ETFs attract significant trading volumes and investor interest, it may prompt other fund managers to enter the market with lower fees to compete with Canary.
Continued ETF Applications Despite Government Shutdown
Even with the ongoing government shutdown, ETF issuers are not slowing down their application processes. Bloomberg analysts report a current emphasis on funds featuring triple leverage. These 3x ETFs aim to track the performance of underlying assets, such as stocks, but amplify returns by three times through leverage, making them a high-risk investment. Historically, the SEC has rejected crypto versions of these funds due to concerns about volatility and complexity. Nonetheless, issuers persist; for example, Tuttle Capital has filed for 60 new leveraged ETFs, while GraniteShares and ProShares have also submitted several proposals. Balchunas humorously noted the surge in applications, likening the process to launching them from a “spaghetti cannon”—more applications lead to a higher likelihood of success. He explained that these funds typically create a base leverage of 2x through swaps before adding an additional 1x via options.
Impact of the Shutdown on ETF Launches
October was anticipated to be a pivotal month for the cryptocurrency sector, as the SEC was set to make decisions on 16 different crypto ETF applications simultaneously. Additionally, new listing standards introduced in September were expected to streamline the approval process; these changes allowed the SEC to review applications more efficiently, reducing the time required for consideration. However, since the government shutdown commenced on October 1, all proceedings have been halted. As deadlines pass without any decisions, the SEC has communicated that it will continue to function but with limited staffing, significantly hindering the progress of ETF approvals.
