October was anticipated as a pivotal month for the introduction of crypto exchange-traded funds (ETFs) in the United States. This period was marked by significant deadlines set by the Securities and Exchange Commission (SEC) to approve or deny various spot crypto ETF applications. However, the recent U.S. government shutdown has disrupted this timeline, leading to a potential shift to November for ETF decisions.
Impact of Government Shutdown on Crypto ETFs
The government shutdown has caused a freeze in the approval process for crypto ETFs. Thankfully, several issuers are employing a procedural strategy that allows them to bypass the need for immediate SEC approval. This alternative approach enabled the launch of four crypto ETFs earlier this week. These include two ETFs from Canary Capital, one from Bitwise, and one from Grayscale.
New Filing Strategies Gaining Traction
Issuers are now submitting updated S-1 registration statements featuring “no delaying amendment” provisions. Under existing U.S. securities law, these filings automatically become effective after a 20-day period unless the SEC intervenes. The SEC’s lack of action on these filings has allowed the four ETFs to commence trading by default. This recent success has prompted a surge in new filings.
- Fidelity has filed an updated S-1 for its spot Solana ETF.
- Canary Capital has also submitted an updated filing for its XRP ETF.
Potential November Launches
If the SEC maintains its current position and does not obstruct the process, the market might witness the debut of the first XRP fund as early as November 13. There are, however, limitations to this workaround. The SEC has previously reviewed filings for ETFs tied to Solana, HBAR, and Litecoin, but has not provided substantial feedback on the XRP application. This lack of engagement could prompt the SEC to reconsider automatic approvals.
James Seyffart, an ETF analyst at Bloomberg Intelligence, suggests that many funds may launch next month, irrespective of the government reopening. However, he cautions that some funds depend on SEC feedback for their S-1 prospectuses and might face delays without the agency’s assistance.
Conclusion: The Future of Crypto ETFs
For investors, this situation marks a significant evolution in the long-standing effort to introduce crypto ETFs in the U.S. Instead of relying solely on the SEC’s official endorsement, issuers are increasingly utilizing procedural methods to advance their initiatives. The momentum towards ETF launches may hinge more on government operations than market conditions as November approaches.
