SEC Logs Spot Litecoin ETF Filing from Canary Capital, Opens Comment Period

The Securities and Exchange Commission has acknowledged Canary Capital’s Litecoin ETF proposal, opening public feedback as it inches closer to a possible reality for a U.S. listing. 

"This is the first altcoin ETF filing to get acknowledged," Bloomberg Senior ETF analyst Eric Balchunas said on X, noting that the proposal has made the most progress in meeting regulatory requirements.

Litecoin, often described as the "silver to Bitcoin's gold," could represent a logical next step given its long operating history and similarities to Bitcoin's structure.

The investment management and advisory firm filed its S-1 registration with the regulator in October, flagging its intention to provide investors with a unique opportunity. That came less than a week after Canary Capital applied to launch an XRP-based ETF.

The question now, Balchunas suggests, is whether the SEC will use the entire 240-day review period or "approve more rapidly.”

It comes as regulators continue to shape their approach to crypto investment products following the landmark approval of spot Bitcoin ETFs in January 2024 and subsequent Ethereum ETFs in May last year.

Nasdaq submitted its application for the spot Litecoin fund on January 15 through a 19b-4 filing, representing the crucial second phase of the crypto ETF approval process. The exchange will act as the listing venue for the proposed Canary Capital investment product.

Exchange Act Rule 19b-4 mandates self-regulatory organizations like Nasdaq file proposed rule changes with the SEC, ensuring transparency and compliance with investor protection standards through public disclosure and comment periods.

Typically, this rule is used for the approval of new financial products, in this case, a spot crypto ETF aside from Ethereum and Bitcoin.

The process involves taking a closer look at market impacts and making sure there are proper operational safeguards in place before moving forward with a listing.

Canary's proposed Litecoin ETF aims to eliminate the technological hurdles that have historically irked mainstream investors.

Rather than wrestling with digital wallets and cryptographic keys, investors would gain Litecoin exposure through their standard brokerage accounts.

The Canary Litecoin ETF is designed to track the CoinDesk Litecoin Price Index (LTX) and would hold Litecoin through a comprehensive custody framework.

Its hybrid model also allows specialized financial firms, known as Authorized Participants, to create and redeem large blocks of ETF shares through an innovative cash-only system.

Instead of dealing directly with the crypto, these broker-dealers would provide cash to the trust in exchange for newly minted shares.

Edited by Sebastian Sinclair