TLDR:
- SEC has opened a 21-day public comment period for Canary Capital’s Litecoin ETF proposal, marking the first altcoin ETF filing to reach this stage
- The ETF would track the CoinDesk Litecoin Price Index (LTX) and use a cash-only system for share creation/redemption
- Litecoin’s price increased 15.1% to $117 following the announcement
- Multiple firms including Grayscale and CoinShares have also submitted Litecoin ETF applications
- The development follows successful launches of Bitcoin ETFs in January 2024 and Ethereum ETFs in May 2024
The Securities and Exchange Commission (SEC) has begun reviewing Canary Capital’s proposal for a Litecoin exchange-traded fund (ETF), opening a 21-day public comment period following Nasdaq’s filing. This development represents the first altcoin ETF application to reach this stage of the regulatory process.
Nasdaq submitted its application for the spot Litecoin fund on January 15 through a 19b-4 filing, marking the second phase of the crypto ETF approval process. The exchange will serve as the listing venue for the proposed investment product if approved.
The Canary Litecoin ETF aims to track the CoinDesk Litecoin Price Index (LTX) and would implement a cash-only system for share creation and redemption. This structure would allow investors to gain exposure to Litecoin through their standard brokerage accounts, eliminating the need for direct cryptocurrency management.
Bloomberg Senior ETF analyst Eric Balchunas highlighted the filing’s progress on social media platform X, noting that it “has made the most progress in meeting regulatory requirements.” The question remains whether the SEC will utilize the entire 240-day review period or opt for a faster approval timeline.
The cryptocurrency markets responded positively to the news, with Litecoin’s price rising 15.1% to reach $117. Trading volume and open interest also increased, indicating growing market participation. Technical analysts observed the formation of a falling wedge pattern, suggesting potential for further price movement.
Canary Capital’s proposal comes as part of a broader wave of crypto ETF applications. Grayscale has filed to convert its existing Litecoin Trust into an ETF, while CoinShares has submitted an S-1 form for a separate offering. The increased interest follows the successful launches of spot Bitcoin ETFs in January 2024 and Ethereum ETFs in May of the same year.
The proposed ETF structure includes a comprehensive custody framework and involves specialized financial firms known as Authorized Participants. These broker-dealers would handle the creation and redemption of ETF shares through cash transactions rather than dealing directly with the cryptocurrency.
Under Exchange Act Rule 19b-4, self-regulatory organizations like Nasdaq must file proposed rule changes with the SEC. This process ensures transparency and compliance with investor protection standards through public disclosure and comment periods.
Market Reaction
Market activity suggests increasing optimism around the potential approval. The Relative Strength Index (RSI) reached 53.52 and showed upward momentum, while the MACD indicator displayed a bullish crossover.
Technical resistance levels to watch include $120, with potential targets between $140 and $160 if the upward trend continues. Trading volume data indicates increased market participation following the ETF filing news.
Cboe has also filed 19b-4 forms to list Solana ETFs from various providers, including VanEck, Canary, Bitwise, and 21Shares. Additionally, Bitwise has submitted an application for a Dogecoin ETF, highlighting the expanding scope of crypto ETF proposals.
The public comment period will allow investors and market participants to share their views on the proposed Litecoin ETF. The SEC will consider these submissions as part of its review process.
Acting SEC Chair Mark Uyeda and Commissioner Hester Peirce’s involvement in a crypto task force suggests potential shifts in the agency’s approach to crypto regulation compared to previous administrative positions.