Shock Debut: Solana, Litecoin and Hedera ETFs List While the SEC Sleeps
Priya Patel
October 28, 2025
“This is the clearest sign yet that issuers will use every rule at their disposal to meet pent-up demand,” said one exchange executive involved in the launches.
The Loophole That Made It Possible
With key parts of the U.S. government shuttered, Bitwise, Canary Capital and several market-makers leaned on automatic-effect registration rules to bring the Solana, Litecoin and Hedera spot ETFs to life. Section 8(a) of the Securities Act allows certain filings to become effective 20 days after submission without staff sign-off; paired with pre-approved exchange listing standards, issuers found a narrow runway to go live while the SEC operated with skeleton crews.
Exchange sources say legal teams had rehearsed the maneuver for months in case of a shutdown. They coordinated with authorized participants to ensure baskets were ready and short-seller locate desks could manage potential squeezes if liquidity lagged.
How Staking Changed the ETF Playbook
The Bitwise Solana Staking ETF packages on-chain yields of roughly 5–7% into a traditional wrapper, distributing rewards as income. That makes it one of the first U.S.-listed funds to pass along native staking flows, a feature long sought by institutions wary of managing validator infrastructure.
Fund sponsors quietly tell CryptoMist they will rebalance staking allocations weekly to avoid slashing risk. They also expect the product to complement the appetite we tracked in our ETF flow analysis, where investors continue to chase yield-enhanced crypto exposure.
Competitive Pressure on Rivals
Grayscale plans to bring its own Solana ETF to market within days, intensifying a fee war that already pushed expense ratios down toward 0.15%. Issuers in the Bitcoin and Ether arenas are watching closely, gauging whether staking-enabled funds cannibalize existing products or unlock new demand from asset allocators that want altcoin beta plus income.
Investors we spoke with compared the launch to the sudden rush of Bitcoin ETF approvals in January. One hedge fund said it will monitor cross-exchange volumes and slippage before rotating capital out of futures-based Solana exposure.
Risks and What Regulators Might Say
The procedural gambit could still invite post-shutdown scrutiny. SEC officials might question whether staking distributions constitute an investment contract, reviving debates around yield-bearing services. Lawyers also expect the agency to clarify how staking rewards will be taxed inside ETFs—an issue that could affect after-fee returns.
Meanwhile, policymakers who already expressed unease about altcoin ETFs will look for signs of retail froth. Expect renewed hearings echoing concerns we highlighted in our coverage of the CFTC nomination fight, where market oversight was front and center.
What Happens Next for Altcoin ETFs
Over the next week, watch creation activity from institutional desks. If early inflows match the buzz, rivals with pending applications—such as XRP and Cardano issuers—could argue they deserve equal treatment once normal operations resume. Portfolio managers also have to decide whether staking risk fits within mandates crafted for passive funds.
For now, the trio of launches underscores a broader shift: issuers and exchanges are testing procedural edges to meet client demand faster. If regulators respond with new guidance, it will set the tone for the next generation of crypto ETFs headed into year-end.