- Three firms applied for a Litecoin ETF.
- The SEC has 240 days to respond.
- The regulator acknowledged Canary Capital’s application, making the ETF approval closer.
Excitement is building around Litecoin (LTC), which is emerging as a strong contender for approval as the next crypto asset to receive an exchange-traded fund (ETF).
With rivals like XRP and Solana (SOL) still awaiting regulatory decisions, Litecoin’s lack of legal drama has sparked speculation that it could soon claim this milestone.
Investors and industry experts are closely watching and eager to see if Litecoin can secure its place alongside Bitcoin (BTC) and Ethereum (ETH).
SEC Delays Decision on Canary Filing
The SEC has officially delayed its decision on Canary Funds’ proposed LTC ETF and is now opening the proposal to public comment.
According to a statement , the U.S. financial regulator seeks input on whether the listing meets regulatory standards, particularly those to prevent fraud and market manipulation.
“The Commission is instituting proceedings to allow for additional analysis of the proposed rule change’s consistency of the Act, which requires, among other things, that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest”,” the SEC said .
Public comments are due by May 26, 2025, with rebuttals accepted until June 9, 2025.
“Another SEC delay on the LTC ETF keeps regulatory clarity out of reach, stalling any FOMO from tradfi allocators and stoking uncertainty for holders.”Alva analysts commented ,
“Recent price chop—$84.65 to $89.51—shows traders aren’t getting the bullish catalyst they wanted, while social feeds are split between frustration and wait and see,” they added.
90% Chance of Approval
A survey from Bloomberg Intelligence shows the current status and approval odds for various spot crypto ETP (Exchange-Traded Product) filings, focusing on filings under the SEC’s 19b-4 rule.
Among the assets listed, Litecoin (LTC) stands out with one of the highest probabilities of approval, sitting at 90%.
This places Litecoin on par with Solana and the broader Baskets/Index category, above others like XRP (85%) and Dogecoin (80%).
The SEC is noted to view Litecoin as a commodity, likely, and it already has CFTC-regulated futures, both of which bolster its case for approval.
“Would love to hear directly from Atkins, but all good chance of happening,” Bloomberg’s ETF expert Eric Balchunas said .
SEC Acknowledges Canary’s Application
The SEC, now under acting Chair Mark Uyeda, has formally acknowledged Canary Capital’s application for a spot Litecoin ETF, marking the first step in a lengthy review process.
The regulator confirmed the filing receipt on Jan. 29. The SEC is assessing Nasdaq’s 19b-4 application, a required step for listing new financial products.
Filed on Jan. 16, Canary’s ETF aims to become the first altcoin ETF beyond Bitcoin and Ethereum, a move that could further expand institutional access to crypto investments.
While the SEC’s acknowledgment does not signal approval, it formally considers the proposal. Over the next several months, the agency will evaluate market risks, investor protections, and regulatory compliance, with a final decision possible within 240 days.
Bloomberg analyst Eric Balchunas noted that the SEC will now open a public comment period and conduct multiple review phases before making a ruling.
Under former Chair Gary Gensler, the agency was widely seen as hostile to altcoin ETFs, allegedly pressuring firms to withdraw applications.
With Gensler’s departure, Canary’s proposal is moving forward, potentially signaling a shift in the SEC’s stance on crypto beyond Bitcoin.
Litecoin Next in Line
Bloomberg’s ETF expert James Seyffart recently highlighted that the U.S. Securities and Exchange Commission (SEC) has provided feedback on the S-1 registration document for a potential LTC ETF.
The S-1 form, a key regulatory filing, outlines a company’s or fund’s financial details before an exchange-traded fund (ETF) can be approved.
Seyffart noted, “Canary just filed an amended S-1 for their Litecoin ETF application. No guarantees—but this might be indicative of SEC engagement on the filing.”
Seyffart’s colleague, Eric Balchunas, an ETF expert, weighed in, saying , “We had heard chatter that the Litecoin S-1 had gotten comments back from SEC. This looks to confirm that, which bodes well for our prediction that Litecoin is most likely to be the next coin approved.”
Balchunas also emphasized that the new SEC chair has not yet taken office, which could be an important factor to consider.
SEC Deadline Looms
Currently, three firms—Canary Capital, Grayscale, and CoinShares—have submitted applications for a spot Litecoin (LTC) ETF.
The SEC’s formal review process only begins once an exchange, such as Nasdaq or Cboe, submits a 19b-4 filing to support the ETF’s listing.
On Jan. 15, Nasdaq officially filed to list the spot LTC ETF applications, triggering the regulatory countdown.
With the review process now underway, the SEC has 45 days to issue an initial response and up to 240 days to deliver a final decision.
This timeline suggests that initial responses to most LTC ETF applications could arrive by March 2025, with final rulings expected by September 2025.
LTC ETF Launch Conditions
Launching a Litecoin ETF depends on meeting regulatory requirements set by the U.S. SEC.
To begin, the issuer must submit an S-1 registration, which provides crucial financial disclosures and outlines the management of Litecoin assets.
The SEC requires assurances that Litecoin is sufficiently liquid and resistant to market manipulation, along with a secure custodial solution to safeguard investor assets.
Transparency is key; the ETF must regularly update its holdings and performance. It must also adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations and establish market surveillance arrangements to ensure fair trading practices.
Additionally, the ETF must secure partnerships with authorized participants and market makers to ensure liquidity and smooth market operations.
Factors like having mature futures products, exchange-traded products (ETPs), and no legal drama also play an important part.
Ultimately, regulatory clarity from bodies like the SEC and the Commodity Futures Trading Commission (CFTC) is essential to guarantee the fund’s stability and protect investor interests.
Eyes on LTC
LTC surged past the $120 mark for the first time since Dec. 17, driven by macroeconomic factors and market speculation.
The boost came from reports suggesting U.S. President Donald Trump might issue executive orders favoring the crypto market and news surrounding ETF developments. This rally has seen LTC rise by 17%.
Speculation that Litecoin could be the next asset to receive ETF approval under the Trump administration has also played a pivotal role in the price surge.
As a result, LTC’s trading volume has skyrocketed, climbing from $450 million to $1.62 billion.
Further fueling the rise, large Litecoin holders have become more active, with addresses holding between 1 million and 10 million LTC, increasing by 220,000 in just two days. On-chain data and technical indicators point to growing buying pressure.
LTC’s price broke out from recent consolidation and is testing key resistance levels. If it breaks above the $126.45 threshold, a target of $150 could be within reach. However, a pullback to $87.22 may follow if the resistance holds.
LTC ETF Filings
Grayscale Joins LTC ETF Race
Grayscale has officially joined the competition for spot LTC ETFs. The fund will build on the foundation of Grayscale’s existing Litecoin Trust.
In its latest submission, Grayscale tackled prior regulatory concerns head-on, providing comprehensive details about the ETF’s structure, custody solutions, and compliance protocols.
The New York Stock Exchange has also filed to list Grayscale’s LTC ETF, signaling strong institutional backing for the proposal once it secures regulatory approval.
CoinShares Bets On LTC
CoinShares has also filed an application for a Litecoin ETF.
“The ETF allows investors a cost-effective way to invest in Litecoin without owning it directly,” the firm said in its filing.
Shares are issued in blocks of 5,000, called “Baskets,” to authorized participants and traded on the Nasdaq. The initial share price is set to facilitate secondary market trading.
CoinShares is the sponsor, while CSC Delaware Trust Company is the trustee. Other roles, including transfer agent, administrator, and custodian, are yet to be disclosed.
Canary Files Litecoin ETF S-1
Canary Capital was the first to launch an LTC ETF, making its move on Oct. 14, 2024.
The firm submitted an S-1 registration statement to the SEC days after it applied for an XRP ETF.
The SEC has up to 240 days. If approved, it would mark a milestone for the crypto industry by offering investors a regulated way to invest in Litecoin.
While the SEC is cautious about crypto, Litecoin’s clearer regulatory record may benefit it over assets like Ripple and Solana.
Nasdaq Files 19b-4
Following Canary Capital’s re-filing, Nasdaq listed its 19b-4 form with the SEC on Jan. 15.
Exchanges must file 19b-4 forms to list funds like a spot LTC ETF.
“This 19b-4 filing from Nasdaq gets things rolling downhill with the SEC, but the SEC still has to acknowledge the filing, which typically happens within a couple of weeks,” said Bloomberg Intelligence’s James Seyffart.
“If or when the SEC acknowledges this filing, we will have a more definitive idea of timelines for a potential denial or approval,” Seyffart added.
Litecoin Available Instruments
While a dedicated Litecoin (LTC) ETF has yet to launch, investors can still gain exposure to the asset through various financial instruments.
These options include Litecoin trusts, exchange-traded products (ETPs), and derivatives like futures contracts, all allowing participation in LTC’s price movements without directly purchasing or holding the asset.
A prominent example is the Grayscale Litecoin Trust , which provides investors with a method for gaining exposure to LTC while sidestepping the complexities of direct ownership.
The trust’s shares mirror Litecoin’s price, offering investors a proportional stake in the token’s value.
Launched on March 1, 2018, the trust began trading on the over-the-counter (OTC) market on Aug. 18, 2020. It charges a 2.50% management fee, though it does not impose performance fees or distribution frequencies.
In addition, several crypto-focused investment funds incorporate Litecoin into their portfolios, providing another avenue for those seeking indirect exposure.
For now, these alternatives allow investors to benefit from Litecoin’s market movements while waiting for a potential ETF approval.
