New Crypto ETFs Launch During U.S. Government Shutdown

Crypto ETFs proceed amid U.S. government shutdown

The recent introduction of spot crypto ETFs on major exchanges moves forward under existing SEC regulations, even amid a shutdown of the U.S. government.

Despite the federal government shutdown, the New York Stock Exchange (NYSE) has introduced four new spot crypto ETFs linked to Solana, Litecoin, and Hedera. The SEC's recent procedural changes allowed these listings to proceed without the usual regulatory review. This article explores the implications of new crypto ETFs launching during a government shutdown, how different ETFs are structured, and what impacts this will have on the cryptocurrency market as a whole.

Key Takeaways

New Listings: The NYSE launched four crypto ETFs focused on Solana, Litecoin, and Hedera.
SEC Procedures: Recent SEC reforms enabled these listings to proceed without typical delays, even during a government shutdown.
Market Dynamics: Solana is well-positioned to lead the new market wave due to its transaction speed and low costs.
Crypto ETF Pipeline: Nearly 100 additional crypto ETFs are awaiting approval, potentially transforming how cryptocurrencies are viewed in institutional finance.

NYSE Makes Moves with New Crypto ETFs

On October 27, the New York Stock Exchange opened the door to a new phase in digital asset investment by listing four fresh spot crypto ETFs that link to Solana, Litecoin, and Hedera, moving beyond just Bitcoin and Ethereum for the first time.

"Confirmed. The Exchange has just posted listing notices for Bitwise Solana, Canary Litecoin and Canary HBAR to launch TOMORROW, and Grayscale Solana is set to convert the day after. Assuming there’s not some last-minute SEC intervention, it looks like this is happening."
— Eric Balchunas (@EricBalchunas) October 27, 2025

These listings materialized after months of anticipation from asset managers who were eager to introduce spot products once the SEC allowed it.

In mid-September 2025, the SEC implemented procedural reforms for commodity-based exchange-traded products, which now include cryptocurrencies. This policy went into effect immediately following its publication on September 17.

This new rule eliminated the previous requirement for individual applications under a specific section of the Securities Exchange Act, which could take months to review for each new ETF. Now, exchanges like the NYSE, Nasdaq, and Cboe can list crypto-backed ETFs directly if the assets meet certain conditions such as having a regulated futures market.

The SEC's decision was built on a foundation of past rulings, allowing spot Bitcoin ETFs in January 2024 and Ethereum spot ETFs in May 2024. The new regulation applied similar logic to other cryptocurrencies deemed sufficiently mature and regulated.

With this framework established, the NYSE took early action and listed its four spot ETFs. Bitwise confirmed that its Solana Staking ETF had been declared effective and started trading on the same day.

According to ETF analyst Eric Balchunas, the Canary Litecoin ETF and Canary Hedera ETF are already effective and will begin trading on Nasdaq shortly.

In reaction to the announcement, Solana’s price surged by about 4%, while Litecoin and Hedera saw modest gains as well. While trading volumes may start low compared to Bitcoin’s previous launches, they could increase as institutional brokerages begin to follow these assets.

The reason new crypto ETFs launched despite the U.S. government shutdown - 1
Solana price chart | Source: crypto.news

How Crypto ETFs Adapted During the U.S. Government Shutdown

On October 1, the U.S. federal government entered a shutdown due to Congress's failure to agree on a funding bill, leading to significant furloughs across major regulatory agencies including the SEC. At this time, the SEC stated it would keep only a limited number of employees for emergency market-surveillance tasks. More than 90% of its staff faced furloughs under its contingency plan.

Under this condition, the launch of new spot crypto ETFs associated with Solana, Litecoin, and Hedera seemed unlikely. However, on October 27, exchanges confirmed the trading would commence as planned.

The situation emerged from the framework of U.S. securities law and the timing of ETF filings made prior to the shutdown. According to a report by FOX Business journalist Eleanor Terrett, confirmed by Bloomberg’s Eric Balchunas, issuers filed two essential documents: the S-1 registration under the Securities Act of 1933 and the 8-A registration under the Securities Exchange Act of 1934.

The S-1 manages the public offering of shares, while the 8-A formally allows those shares to be traded on an exchange. The 8-A only becomes valid once the S-1 is effective, creating a timing alignment requirement. The NYSE validated all 8-A filings early Monday morning, completing the necessary steps for trading to begin.

Typically, SEC staff would review S-1 filings; however, by law, S-1 filings automatically become effective twenty days after submission unless an issuer requests a delay or the SEC steps in. This provision was established to prevent bureaucratic hurdles and ensure registration statements cannot be delayed indefinitely.

In this instance, issuers included wording in their amended S-1s which confirmed they would automatically become effective after the statutory period. As a result, they were able to move forward even without direct SEC approval. This automatic effectiveness provision held the same legal authority as formal SEC approval, hence allowing the ETFs to launch even with the agency inactive.

With all 8-A filings approved by the exchange and the S-1s achieving automatic effectiveness, all necessary legal protocols were satisfied. Essentially, the ETFs launched because the entire process was structured to function lawfully without needing real-time regulatory input.

Comparing Solana to Litecoin and Hedera

The newly launched funds highlight the different approaches of issuers entering the same market. Canary Capital’s Litecoin and Hedera ETFs are traditional spot products that hold the actual LTC and HBAR tokens through regulated partners such as BitGo and Coinbase Custody.

Conversely, Bitwise’s Solana Staking ETF employs a more innovative method. Instead of merely holding SOL tokens, this fund stakes them directly on the Solana network and distributes rewards, anticipated to average around 7% annually to its shareholders. It becomes the first U.S. crypto ETF to merge spot exposure with on-chain yield.

"Introducing $BSOL — the Bitwise Solana Staking ETF. Starts trading tomorrow.
– First U.S. ETP to have 100% direct exposure to spot SOL
– Maximizing Solana’s 7%+ average staking reward rate
– Targeting 100% of assets staked
– Staking through Bitwise Onchain Solutions"
— Bitwise (@BitwiseInvest) October 27, 2025

Grayscale’s Solana ETF is set to convert its existing Solana Trust into an open-ended ETF on October 29, which will also add liquidity to this space, providing Solana with two separate trading ETF options within the same week.

Solana appears to have significant potential to lead this new wave for several reasons. The network processes over 65,000 transactions per second—much higher than competing blockchains—with average transaction costs remaining below $0.01. Furthermore, it supports an active ecosystem in crypto, boasting substantial volumes in DeFi platforms, memecoins, and blockchain gaming.

Also, Solana’s market cap and liquidity rank it among the top five global crypto assets, while Litecoin and Hedera are positioned outside the top twenty. This makes SOL easier to incorporate into large portfolios and lowers risks of slippage or illiquidity.

The structure of the Bitwise ETF may further highlight Solana’s advantages. Staking yields offer a tangible return source, a feature often missing in conventional ETFs. For institutional investors, this aligns with income-generation models already prevalent in fixed-income and dividend strategies.

Litecoin and Hedera will still test demand for smaller networks and explore where investor interest goes beyond major assets, but Solana represents a blend between technical maturity and institutional trust.

An Emerging Wave of New Crypto ETFs

The approval of these latest ETFs paves the way for a broader array of crypto funds awaiting regulatory approval. Current industry trackers indicate that nearly 100 digital-asset ETFs are lined up in the U.S. regulatory pipeline, covering over 20 tokens.

Many of these applications were submitted months ago and are now in a position to accelerate under the SEC’s recent listing standards once normal government operations resume.

Noteworthy proposals include spot ETFs linked to Ripple, Cardano, and Avalanche, along with multi-asset “basket” products designed to hold a mix of leading cryptocurrencies. Some issuers are also exploring hybrid models that blend staking rewards or on-chain lending income with traditional spot exposure, inspired by Bitwise’s Solana Staking ETF.

Experts predict that upcoming approvals may occur between late 2025 and early 2026, depending on how the SEC manages its backlog.

The potential market impact could be considerable. ETFs provide crypto exposure for large financial advisors, retirement funds, and brokerage platforms that cannot hold tokens directly. This structural access opens avenues for institutional participation, possibly directing significant capital toward assets that previously had limited demand outside exchanges.

Bitcoin spot ETFs attracted over $10 billion in inflows within their first month of trading in January 2024, while Ethereum ETFs exceeded $1 billion shortly after their approval in May 2024.

If a fraction of such capital flows into new offerings, Solana, Litecoin, and others may see increased liquidity and reduced volatility over time. Furthermore, the next wave of ETFs could redefine the status of altcoins. Rather than being viewed solely as speculative assets, they may evolve into credible investments that meet compliance, custody, and transparency standards, facilitating cryptocurrency's advancement into a realm where regulation, price discovery, and investor protection can coexist.