These Asset Managers Launched Crypto ETFs While the Government Was Closed—Here’s How They Did It

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The government shutdown couldn’t keep crypto’s newest milestone at bay. As federal agencies sat idle, the first U.S. exchange-traded products tied to altcooin cryptocurrencies launched anyway on Oct. 27—marking a watershed moment that could unleash dozens more digital asset funds without the regulatory red tape that once slowed the industry to a crawl.

Canary Capital and Bitwise Asset Management are the trailblazers, launching ETFs tied to litecoin, hedera, and solana despite the Securities and Exchange Commission operating with skeleton staff during the federal shutdown. The move signals that a new era of streamlined crypto product launches has arrived, potentially opening the floodgates for asset managers who’ve been waiting on the sidelines.

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What made these launches possible wasn’t luck—it was a fundamental change in how the SEC handles cryptocurrency ETFs. In mid-September, SEC commissioners voted to allow three national securities exchanges to adopt generic listing standards for cryptocurrency and other commodity exchange-traded products.

That vote eliminated the lengthy, product-specific reviews that previously dragged out the approval process. Before this change, new spot crypto ETFs—like the bitcoin funds that launched in January 2024—faced scrutiny from two different groups of SEC staffers in a process that could stretch for months or even years.

“We’ve had several interactions with the SEC on both filings over the last year,” Canary Capital founder and CEO Steven McClurg told Reuters. “We were very much ready to go” before the shutdown.

The new rules allow crypto asset managers to launch products as long as they meet certain criteria, removing what McClurg told Reuters was “the last obstacle” for firms hoping to bring dozens of new cryptocurrency funds to market.

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The implications extend far beyond Tuesday’s launches. Canary Capital has filed for multiple cryptocurrency products but won’t roll them all out simultaneously. McClurg said to Reuters that the firm plans to introduce additional offerings “in the coming weeks and months,” though he noted not all pending filings have reached the same comfort level as the litecoin and hedera products.

Dave Nadig, head of research at ETF.com, told Reuters that when combined with a 2019 rule designed to streamline the ETF listing process, “the standardized listings give the whole industry plenty of room” to roll out new products.

For retail investors, this wave of new crypto ETFs could provide regulated exposure to alternative cryptocurrencies without the complexity and security risks of buying digital assets directly through exchanges. The products trade on traditional stock exchanges, can be held in retirement accounts, and offer the familiar structure investors know from conventional ETFs.

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The timing carries a certain irony—major financial innovation advancing while government offices sit dark. But the launches underscore how the September regulatory changes shifted power from individual SEC staff reviews to standardized criteria that don’t require active oversight for each product.

Still, questions remain about the dozens of other crypto ETF applications in the pipeline. McClurg told Reuters that while Canary is comfortable launching the litecoin and hedera offerings based on pre-shutdown discussions with the SEC, “There are a lot of filings we’ve still got out there that we don’t have that level of comfort with.”

As the shutdown drags on and more firms test the new approval framework, the crypto industry faces a unique experiment: discovering exactly how self-executing the streamlined process can be—and whether the regulatory floodgates have truly opened, or just cracked slightly ajar.

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This article These Asset Managers Launched Crypto ETFs While the Government Was Closed—Here’s How They Did It originally appeared on Benzinga.com