Regulators' Delay Exposes Altcoin ETFs' Regulatory Tightrope

The U.S. Securities and Exchange Commission (SEC) has pushed back decisions on two altcoin exchange-traded funds (ETFs)—the Canary HBAR ETF and the Grayscale Polkadot (DOT) ETF—until November 8, 2025. The delay follows multiple postponements, with the SEC seeking additional clarity on whether these products comply with existing listing standards, particularly Nasdaq’s commodity-based trust share rules. Both ETFs are part of a broader industry effort to expand crypto investment vehicles beyond Bitcoin and Ethereum.

The regulatory holdup is linked to the SEC’s ongoing efforts to finalize generic listing standards for spot crypto ETFs. The agency has been working with major exchanges such as Nasdaq, NYSE, and CBOE BZX to refine the definition of “commodity” in the context of cryptocurrency products. These efforts aim to create a consistent framework that addresses the unique characteristics of digital assets while aligning with existing regulatory structures. The outcome of this work is expected to influence the approval of not only HBAR and Polkadot ETFs but also other altcoin-based funds.

Despite the regulatory uncertainty, both HBAR and Polkadot have shown strong market performance in recent weeks. Hedera’s HBAR token rose by 1.8% in the past week, trading above $0.22, while Polkadot’s DOT surged nearly 4%, with a 225% increase in 24-hour trading volume. Analysts suggest that these gains reflect growing investor interest in altcoins, particularly those with established use cases and regulated futures markets. The market’s optimism is also fueled by the belief that the SEC may adopt a similar approval framework for altcoin ETFs as it did for Bitcoin and Ethereum.

Grayscale, which previously secured a legal victory against the SEC, has been at the forefront of the push for regulated crypto investment products. The firm recently submitted a 19b-4 filing to the SEC to list and trade a Hedera ETF. If approved, the fund would allow institutional investors to gain exposure to HBAR without directly holding the asset. Grayscale’s broader strategy includes applications for ETFs tracking Cardano, Solana, and XRP, highlighting its aggressive expansion into the altcoin market.

Industry observers remain cautiously optimistic about the chances of approval for these ETFs. Bloomberg analysts estimate a 90% likelihood of approval within the near term, citing the SEC’s recent trend of approving crypto ETFs and the growing institutional demand for such products. However, the final decision will hinge on the clarity of the SEC’s updated listing rules and the degree to which the HBAR and DOT ETFs meet those criteria. Until then, the path to market for these funds remains uncertain.