Is Litecoin poised to become the next cryptocurrency to secure a coveted spot ETF? Recent activity at the SEC has the industry speculating that LTC could be on deck to join the exclusive club currently occupied by just Bitcoin and Ethereum. But with imminent leadership changes at the regulatory agency, the journey from filing to approval is anything but certain.
Reading the Regulatory Tea Leaves
This week, eagle-eyed observers noticed that the Canary Funds’ Litecoin ETF filing had been amended, a development that ETF experts believe could signal that the SEC is actively engaging with the proposal. As Bloomberg Intelligence analysts Eric Balchunas and James Seyffart note, this sort of back-and-forth often occurs when a filing is under serious consideration.
Canary Funds just filed an amended S-1 for their Litecoin ETF filing. No guarantees — but this might be indicative of SEC engagement on the filing.
— James Seyffart, Bloomberg ETF Analyst
This chatter intensified late Thursday when Nasdaq formally filed a 19b-4 form on behalf of Canary Funds’ Litecoin product. This procedural move starts the clock on an official approval or rejection, meaning that after months of silence, we may finally get a concrete signal on the SEC’s stance.
The Case for Litecoin
On the surface, Litecoin may seem an unlikely candidate to spearhead the next wave of crypto ETFs. At around $8.8B, LTC’s market cap ranks just 11th among qualifying cryptos and 24th overall. But a deeper look reveals some unique strengths:
- Classified as commodity: As a direct fork of Bitcoin, the consensus thus far has been that LTC would meet the criteria laid out in previous BTC approvals.
- Staying out of the crosshairs: No allegations of securities law violations currently plague Litecoin, unlike some higher-cap peers like XRP and Solana.
- Longevity and volume: As one of the oldest mainstream coins, Litecoin has developed a significant investor base and robust trading liquidity.
These factors likely position Litecoin near the front of the pack for potential ETF contenders. And recent price action suggests that the market may be starting to connect the dots as well.
But the Regulatory Winds Are Shifting
The Litecoin ETF tea leaves are intriguing, but it’s impossible to handicap the odds without accounting for the looming leadership shuffle at the SEC. Chairman Gary Gensler will soon hand the reins to GOP Commissioner Paul Atkins, marking a seismic shift for the notoriously crypto-cautious agency.
Where Gensler slow-walked applications and frequently raised investor protection concerns, Atkins is expected to take a more free-market approach to crypto oversight. This changing of the guard injects a new level of uncertainty and possibility into the years-long campaign for mainstream crypto ETF access.
We expect a wave of cryptocurrency ETFs next year, albeit not all at once. The change in SEC leadership is a huge variable.
— Eric Balchunas, Bloomberg Senior ETF Analyst
The Bottom Line
Every twist and turn on the crypto ETF roller coaster is headline-worthy, but the reality is that these things unfold at a glacial regulatory pace. Even if the stars were to align perfectly for Litecoin in the near-term, an actual exchange-traded product would still likely be months away, if not longer.
For LTC bulls, the combination of favorable fundamentals and well-timed regulatory momentum is understandably exciting. But as seasoned crypto observers know, the road to mainstream adoption is littered with false starts and unpredictable detours. Only time will tell if Litecoin truly has the inside track in the race for the next big crypto ETF.
