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- Canary Capital has filed for a spot Litecoin ETF.
- The ETF goals to supply institutional buyers publicity to Litecoin’s worth.
- Regulatory challenges might come up, particularly concerning market infrastructure and liquidity.
Canary Capital, a notable title on this planet of cryptocurrency funding, has filed for a spot Litecoin exchange-traded fund (ETF) with the US Securities and Trade Fee (SEC).
This latest submitting comes simply days after the corporate submitted an identical registration for a spot XRP ETF.
The most recent filings sign the agency’s formidable growth plans within the digital asset funding panorama, focusing on institutional buyers searching for dependable cryptocurrency publicity.
Aiming to faucet into the potential of Litecoin (LTC)
The newly filed S-1 registration assertion outlines Canary Capital’s goal to offer buyers with publicity to the worth of Litecoin (LTC) held by the belief.
Based on the submitting, the ETF will observe the worth actions of Litecoin, though specifics in regards to the custodian or administrator for the fund weren’t disclosed.
Canary Capital goals to place Litecoin as a compelling alternative for institutional buyers in search of publicity to a “time-tested and dependable cryptocurrency.”
In an announcement, the agency emphasised Litecoin’s outstanding position within the broader cryptocurrency ecosystem. The digital foreign money is acknowledged as one of many longest-running blockchains, boasting 100% uptime since its inception in 2011.
This spectacular observe document of safety and reliability, together with important enterprise use instances, has positioned Litecoin as a pretty asset for potential buyers.
Canary Capital’s transfer to file for a spot Litecoin ETF relies on the assumption that the cryptocurrency’s resilience and long-standing historical past make it a novel and interesting funding choice.
Navigating regulatory hurdles
James Seyffart, an ETF analyst at Bloomberg, weighed in on the submitting, noting that whereas there are current exchange-traded merchandise that embody Litecoin, similar to these from CoinShares in Switzerland and a Grayscale belief within the US, gaining approval from the US SEC is not going to be with out challenges.
Additionally there are some ETPs that already maintain Litecoin.$LITE in Switzerland from @CoinSharesCo $ELTC in Germany from @ETCGroupLLC (now owned by @BitwiseInvest )
We even have a @Grayscale belief right here within the US:$LTCN
— James Seyffart (@JSeyff) October 15, 2024
Nonetheless, Seyffart highlighted the likelihood that Litecoin may very well be handled equally to Bitcoin when it comes to regulatory classification. Since Litecoin originated as a fork of Bitcoin, it shares a few of Bitcoin’s decentralized and commodity-like traits.
The approval of Bitcoin ETFs earlier this yr set a possible precedent that would work in favour of Litecoin’s case, given their shared historical past and related traits.
Nonetheless, Seyffart cautioned that regardless of this similarity, Litecoin would nonetheless want to satisfy the SEC’s stringent necessities for market infrastructure and liquidity.
The present regulatory surroundings below the SEC requires a large and liquid futures market that’s federally regulated in america, which Litecoin presently lacks. This absence of a regulated futures market may complicate the approval course of for the ETF, particularly below the present administration’s regulatory framework.
Nonetheless, the upcoming US presidential election may considerably affect the SEC’s stance on cryptocurrency ETFs. Former President Donald Trump, who has been considered as extra beneficial towards the cryptocurrency business, has beforehand expressed his intention to dismiss present SEC Chair Gary Gensler if he had been to return to the workplace.
Ought to there be a shift in management on the SEC, it may create a extra accommodating regulatory surroundings for cryptocurrency merchandise, together with the potential approval of spot crypto ETFs similar to these for Litecoin and XRP.
Seyffart identified that the submitting for a spot Litecoin ETF may very well be seen as a strategic transfer in anticipation of a possible change within the SEC’s management.
Nonetheless, a 19b-4 submitting, which might be submitted by exchanges on behalf of the issuer, remains to be required to begin the official approval course of. As soon as this doc is filed, it can set off a particular timeline for the SEC to overview and reply to the ETF utility.
Canary Capital’s broader crypto ETF technique
Canary Capital’s choice to file for a spot Litecoin ETF comes shortly after its S-1 registration assertion filed on Tuesday for a spot XRP ETF, reflecting the agency’s broader technique to carry a number of cryptocurrency ETFs to the market.
The corporate has expressed confidence within the development potential of each Litecoin and XRP, that are acknowledged as important gamers within the digital foreign money area. If permitted, these ETFs would offer institutional buyers with new avenues for diversifying their portfolios by way of direct publicity to the respective cryptocurrencies.
The SEC has but to approve a spot XRP ETF, and the applying might face extra scrutiny as a result of company’s ongoing authorized battle with Ripple Labs, the corporate behind XRP. The SEC has accused Ripple of conducting an unregistered securities providing price $1.3 billion, a authorized dispute that would complicate the approval course of for a spot XRP ETF.