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Why the SEC Delayed Avalanche and Hedera ETFs — and What It Means for Crypto Markets

The U.S. Securities and Exchange Commission (SEC) has once again hit the brakes on two highly anticipated cryptocurrency exchange-traded funds (ETFs), adding to the regulatory uncertainty that continues to hang over the digital asset sector. The latest delays affect proposals for a Spot Avalanche (AVAX) ETF, submitted by VanEck, and a Spot Hedera (HBAR) ETF, filed by Grayscale. As investors look for clearer signals on the future of crypto-based ETFs, these postponements have sparked both concern and speculation about what comes next for crypto investments on Wall Street.

SEC Postpones Decision on Avalanche ETF to Mid-July

VanEck, a prominent asset management firm known for pioneering investment products, submitted its application for a Spot Avalanche ETF in March 2025. The ETF aims to offer investors exposure to Avalanche (AVAX), a blockchain platform known for its speed and scalability, through traditional equity markets without requiring direct crypto ownership. The proposed fund would have been listed on Nasdaq, positioning Avalanche alongside other digital asset products that have made their way to mainstream finance.

However, in a decision announced this week, the SEC said it would extend its review period until July 15, 2025. The regulator cited the need for more time to evaluate the proposal, adding that public comments would also be solicited as part of its deliberative process. This move follows an earlier delay for a similar Spot Avalanche ETF proposal by Grayscale, underscoring the SEC’s cautious approach in approving new crypto-linked financial products.

The announcement sent ripples through the crypto market. Avalanche’s price dropped 10.82% in the aftermath, falling to $18.89, while trading volume surged by 33.34% over the past 24 hours, according to data from CoinMarketCap. The market’s swift reaction highlights how sensitive crypto valuations are to regulatory developments, particularly when it comes to ETFs that could potentially drive mainstream adoption.

Grayscale’s Hedera ETF Faces Similar Delay

The SEC delivered a second blow to crypto enthusiasts by delaying its decision on Grayscale’s Spot Hedera ETF. The regulator chose to open a public comment period rather than issue an approval or denial at this stage. This process invites investors, academics, and industry stakeholders to provide feedback on the proposed ETF, addressing whether a Hedera-based investment product poses risks or benefits to U.S. markets.

Following the news, Hedera (HBAR) saw its price decline by 9.32%, dropping to $0.1542. Meanwhile, trading volumes jumped 58%, suggesting heightened interest from traders seeking to capitalize on market volatility or reposition their holdings in light of the SEC’s announcement.

The commission now has until November 11, 2025, to issue a final verdict on Grayscale’s Hedera proposal. The delay follows a similar postponement of another Hedera ETF application submitted by Canary earlier in the week, reinforcing perceptions that U.S. regulators remain hesitant about green-lighting any Hedera-linked exchange-traded funds for the time being.

Importantly, the SEC emphasized that the decision to delay does not signal a predetermined outcome. Officials described the extension as a standard part of the review process designed to gather more information and assess market impact before reaching a conclusion.

Implications for the Crypto ETF Landscape

These back-to-back delays have added to the sense of uncertainty surrounding crypto ETFs. While Bitcoin and Ethereum ETFs have already made headway, regulators have been slower to act on ETFs linked to alternative blockchains, or “altcoins,” such as Avalanche and Hedera.

Yet optimism still runs high in some circles. Bloomberg Intelligence analysts estimate an 80% likelihood that Grayscale’s Hedera ETF will gain approval in late 2025. Similar forecasts predict a 90% chance for Solana and Litecoin ETFs to receive the regulatory nod by year’s end.

Market watchers believe that a wave of approvals could be on the horizon. Bloomberg ETF analyst Eric Balchunas referred to this potential surge as an “altcoin ETF summer,” suggesting that Solana could lead the charge, setting the stage for other altcoin ETFs to follow. The growing acceptance of crypto products in institutional finance has bolstered hopes that the current delays are temporary setbacks rather than signs of regulatory rejection.

A Cautious Path Forward

The SEC’s cautious stance reflects broader concerns about market stability, investor protection, and the readiness of infrastructure to support novel crypto-based products. By opening public comment periods and extending decision deadlines, the agency seeks to balance innovation with its mandate to protect U.S. financial markets from undue risk.

Some experts argue that this deliberative pace is necessary to prevent missteps that could undermine both investor confidence and regulatory credibility. Others, however, warn that prolonged uncertainty may deter investment and stifle innovation in the fast-moving digital asset space.

For now, investors will have to wait and see whether 2025 brings the regulatory clarity they are hoping for. With multiple ETF proposals still in the pipeline, including those linked to Solana, Litecoin, and other emerging blockchains, the stage is set for what could be a pivotal year for crypto finance.

Market Reaction and What Comes Next

The SEC’s delays have undoubtedly rattled investor sentiment in the short term. The sharp declines in AVAX and HBAR prices highlight just how tightly crypto markets are intertwined with regulatory decisions. Yet the accompanying surge in trading volumes indicates that investors remain engaged, actively adjusting their strategies in response to news from Washington.

Source: CoinMarketCap

Looking ahead, the focus will shift to the SEC’s upcoming decisions, particularly as deadlines approach for other pending ETF applications. Market participants will also be watching for signs of a broader shift in regulatory attitudes, as well as any legislative efforts that could clarify the rules governing crypto ETFs.

The outcome of the public comment periods for the Avalanche and Hedera proposals will offer clues about the level of industry and public support for these products. In the meantime, the crypto community continues to advocate for fair and transparent regulatory frameworks that can accommodate the sector’s unique attributes while protecting market integrity.

Conclusion

The SEC’s decision to delay rulings on the Avalanche and Hedera ETFs underscores the complexity of integrating digital assets into mainstream finance. While these postponements have temporarily dampened market enthusiasm, the underlying demand for crypto-linked investment products remains strong. As 2025 unfolds, investors, regulators, and industry players alike will be looking for the clarity and direction that could define the next chapter of crypto’s evolution in the financial markets.

The question is no longer if altcoin ETFs will be approved, but when — and which digital assets will be the first to cross the regulatory finish line.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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