How Can Altcoin ETFs Go Live Without Direct SEC Approval?

In a surprising move, several altcoin ETFs are set to launch this week in the US despite the US government shutdown. Canary Capital ’s Litecoin and Hedera funds, as well as Bitwise’s Solana ETF, are among those slated to begin trading.

This development is particularly noteworthy considering the prevailing govt shutdown, which has crippled the SEC's ability to review new financial products crippled the SEC's ability to review and approve new financial products. If the SEC is largely absent from the approval process due to the closure, how is it possible for them to go live without direct SEC approval? Let’s see.

Altcoin ETFs to Launch This Week

In a recent X post , Fox Business journalist Eleanor Terrett shed light on several crypto exchange-traded funds slated to debut this week. Bitwise and Canary Capital's crypto funds are set to start trading tomorrow, marking a significant milestone in the expansion of investment vehicles beyond Bitcoin and Ethereum. Also, Grayscale's GSOL will convert on Wednesday.

As announced by CEO Steven McClurg, Canary Capital's spot HBAR and LTC products are set to start trading tomorrow. McClurg noted, “Litecoin and Hedera are the next two token ETFs to go effective after Ethereum. We look forward to launching tomorrow.”

US Government Shutdown Can't Stop Crypto ETFs

McClurg stated that the investment manager has had “several interactions with the SEC” on both filings over the last year. He added, “We were very much ready to go" before the shutdown.

Significantly, these upcoming altcoins ETFs have sparked widespread enthusiasm, but with a wave of ambiguity and concerns. Despite the SEC's limited capacity during the political turmoil, how are crypto products still moving forward?

Amid this confusion, Eleanor Terrett provides clarity. She stated that certain filings can still become effective without direct approval. This is due to a provision that allows registration statements to automatically go live 20 days after filing, provided the issuer has included specific language in their amended S-1. This means the SEC doesn't need to manually approve these filings, enabling the ETFs to launch even during the shutdown.

The process relies on two key filings: the 8-A, which formally registers ETF shares under the 1934 Act for trading on an exchange, and the S-1, which registers them under the Securities Act of 1933. With the NYSE certifying the 8-A filings and the S-1 filings set to go effective automatically, these ETFs are on track for launch. According to Eleanor Terrett, this process demonstrates how crypto products can navigate the regulatory framework despite the challenges posed by the government shutdown .