- Canary Capital has applied for a spot Litecoin ETF.
- The ETF aims to provide institutional investors with exposure to the value of Litecoin.
- Regulatory issues may arise, particularly with regard to market infrastructure and liquidity.
Canary Capital, a famous company in the cryptocurrency investment world, has applied for a spot Litecoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC).
This latest filing comes just days after the company filed a similar registration for a spot XRP ETF.
The latest filing signals the company’s ambitious expansion plans in the digital asset investment landscape, targeting institutional investors seeking trusted cryptocurrency exposure.
We aim to leverage the potential of Litecoin (LTC).
The newly filed S-1 registration statement outlines Canary Capital’s goal to provide investors with exposure to the value of Litecoin (LTC) held by the trust.
According to the filing, the ETF will track Litecoin’s price movements, but no specific details about the fund’s custodian or administrator were disclosed.
Canary Capital aims to position Litecoin as an attractive choice for institutional investors seeking exposure to “time-tested and trusted cryptocurrencies.”
In a statement, the company highlighted Litecoin’s prominent role in the broader cryptocurrency ecosystem. The digital currency boasts 100% uptime since its launch in 2011, making it one of the longest-running blockchains.
This impressive security and reliability record, along with significant enterprise use cases, positions Litecoin as an attractive asset for potential investors.
Canary Capital’s move to apply for a spot Litecoin ETF is based on the belief that cryptocurrencies’ resilience and long history make them a unique and attractive investment option.
Navigating Regulatory Hurdles
Bloomberg ETF analyst James Seyffart weighed in on the filing, noting that existing exchange-traded products containing Litecoin, such as Switzerland’s CoinShares and the US’ Grayscale Trust, have received approval from the US SEC. It will not be without challenges.
There are also some ETPs that already hold Litecoin.$LITE in switzerland @CoinSharesCo $ELTC in germany @ETC Group LLC (I currently own @BitwiseInvest )
We also @Grayscale Trust Here in America:$LTCN
— James Seyff (@JSeyff) October 15, 2024
However, Seyffart highlighted the possibility that Litecoin could be treated similarly to Bitcoin in terms of regulatory classification. Because Litecoin began as a fork of Bitcoin, it shares some of Bitcoin’s decentralized and commodity-like characteristics.
The Bitcoin ETF approval earlier this year set a potential precedent that could work in favor of the Litecoin case, given their shared history and similar characteristics.
However, Seyffart cautioned that despite these similarities, Litecoin still needs to meet the SEC’s stringent requirements for market infrastructure and liquidity.
The SEC’s current regulatory environment requires a large, federally regulated futures market in the United States, something Litecoin currently lacks. The lack of a regulated futures market could complicate the ETF approval process, especially under the current government’s regulatory framework.
Nonetheless, the upcoming US presidential election could have a major impact on the SEC’s stance on cryptocurrency ETFs. Former President Donald Trump, who has been evaluated as being more friendly to the cryptocurrency industry, has announced his intention to fire current SEC Chairman Gary Gensler if he returns.
A change in leadership at the SEC could create a more receptive regulatory environment for cryptocurrency products, including potential approval of spot cryptocurrency ETFs like Litecoin and XRP.
Seyffart noted that the spot Litecoin ETF application could be seen as a strategic move in anticipation of a potential change in SEC leadership.
Nonetheless, a 19b-4 filing filed by the exchange on behalf of the issuer is still required to begin the formal approval process. Once this document is filed, a specific timeline will begin for the SEC to review and respond to the ETF application.
Canary Capital’s Broad Cryptocurrency ETF Strategy
Canary Capital’s decision to apply for a spot Litecoin ETF came shortly after its S-1 filing. name It filed a spot XRP ETF on Tuesday, reflecting the company’s broader strategy to bring multiple cryptocurrency ETFs to market.
The company expressed confidence in the growth potential of Litecoin and XRP, which are seen as significant players in the digital currency space. If approved, these ETFs will provide institutional investors with a new way to diversify their portfolios through direct exposure to these cryptocurrencies.
The SEC has yet to approve a spot XRP ETF, and the application could face additional scrutiny due to the agency’s ongoing legal battle with Ripple Labs, the company behind XRP. The SEC accused Ripple of conducting an unregistered securities offering worth $1.3 billion, a legal dispute that could complicate the approval process for a spot XRP ETF.