This Week in Digital Assets: Government shutdown window opens the door for altcoin ETFs
< BlogThis week saw a widened perimeter for regulated crypto access in the US. A cluster of altcoin ETFs began trading or were cleared to list, led by Bitwise’s Solana Staking ETF and accompanied by Canary Capital’s Litecoin and Hedera products, while Grayscale’s Solana ETF moved onto NYSE Arca. In parallel, 21Shares filed for a Hyperliquid HYPE ETF, and Fidelity pushed forward with its Solana ETF plan through an amended S-1. We view this as the start of a durable cycle in which diversified crypto exposure migrates into exchange-listed wrappers that traditional platforms can hold. Further, we also view the rush of ETFs as deliberate rather than coincidental, with issuers using the procedural window created by the current federal government shutdown to convert regulatory silence into market access.
During this shutdown, the SEC’s Division of Corporation Finance stated staff could not declare registration statements effective. The agency also explained how removing a delaying amendment allows a filing to go effective by operation of law after twenty days under Section 8(a), including the exact language required. That guidance created a lawful route to automatic effectiveness without staff action. Canary’s amended filings leaned into this approach, and there are indications in the filings that other issuers synchronized their listings with exchange certifications while the statutory clock ran. We believe this playbook could influence filing behavior even after normal operations resume, although the agency can still request amendments or take emergency action once staffed again.
We also see structural tailwinds from the SEC’s September approval of generic listing standards for commodity-based products across various trading venues. Those standards reduce reliance on bespoke 19b-4 approvals when certain conditions are met, effectively shortening time to market for qualifying crypto ETPs. That change lowers friction for plain-vanilla spot exposures and sets the stage for a broader product set once registrations are effective. Issuers are now combining that framework with shutdown timing to accelerate launches, and we expect to see a flood of new altcoin ETPs come to market in the coming weeks.
Early flow signals suggest investors are discriminating across products. Bitwise has seen over $150 million of net inflow for its Solana fund since its launch on October 28, aided by staking capabilities and promotional fee terms, while activity in the newly listed Litecoin and Hedera wrappers appears limited so far. We expect flows to concentrate in a narrow set of blue-chip altcoins with liquidity, developer traction, staking, and multi-venue custody support, with Solana at the front of the pack and assets like Chainlink or Sui in the next wave as issuers test demand. The first few hundred million of sticky assets under management could likely come from trading desks, hedge funds, and wealth platforms that want regulated wrappers for directional exposure. We believe that for altcoin ETPs to cross into the multi-billion range, it will likely require broader model portfolio adoption (like 401k plans) and inclusion in multi-asset products.
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Kiln is the leading staking and digital asset rewards management platform, enabling institutional customers to earn rewards on their digital assets, or to whitelabel earning functionality into their products. Kiln runs validators on all major PoS blockchains, with over $11 billion in crypto assets being programmatically staked and running over 5% of the Ethereum network on a multi-client, multi-cloud, and multi-region infrastructure. Kiln also provides a validator-agnostic suite of products for fully automated deployment of validators and reporting and commission management, enabling custodians, wallets, and exchanges to streamline staking or DeFi operations across providers. Kiln is SOC2 Type 2 certified.
