SEC Delays Litecoin ETF Proposal by Canary Capital Amid Ongoing Regulatory Scrutiny
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Canary Capital’s proposal for a spot Litecoin (LTC) exchange-traded fund (ETF), inviting public comments on its regulatory compliance. This latest delay follows a trend observed with other cryptocurrency ETF applications, including those for XRP, Hedera, and Dogecoin, which were also deferred last week.
Context of the Delay
The SEC’s move to delay the Litecoin ETF decision adds to uncertainty in the crypto space, given the agency’s recent pattern of hesitance regarding the approval of various cryptocurrency-related investment products. The news comes as a disappointment to some in the market who had hoped that the Canary Capital proposal might be treated differently, especially considering that it had been the only application not delayed in the prior regulatory round celebrated by some as a hopeful sign for Litecoin enthusiasts.
On its deadline day, the SEC officially announced the postponement, highlighting the need for public insights into potential regulatory concerns surrounding the proposed ETF. “In particular, the Commission seeks comment on whether the proposal to list and trade Shares of the Trust, which would hold LTC, is designed to prevent fraudulent and manipulative acts and practices or raises any new or novel concerns not previously contemplated by the Commission,” stated the SEC in its filing.
Background on the Proposal
Canary Capital, founded by former Valkyrie co-founder Steven McClurg in 2024, submitted the original paperwork for the Litecoin ETF in October. The proposal would aim to create an investment vehicle for LTC, which currently boasts a market capitalization of approximately $6.6 billion. Litecoin, often viewed as a lighter version of Bitcoin (BTC), operates on an open-source blockchain and has garnered a reputation for its faster transaction times and lower fees.
Expert Predictions
ETF analysts and experts have been cautiously optimistic about the future of Litecoin with regard to ETF approvals. Bloomberg Intelligence reported that the cryptocurrency could be the next major asset wrapped up in an ETF amidst whispers that Canary Capital had received some comments from the SEC about its application earlier this year.
The implications of this proposal are significant given the current crypto regulatory landscape, which is seeing shifts in leadership and priorities. Recently appointed SEC Chair Paul Atkins, who took over from Gary Gensler in April, is said to bring new energy to the agency’s approach to cryptocurrencies. His leadership is being viewed as a “huge variable,” according to Bloomberg senior ETF analyst Eric Balchunas.
Conclusion
The SEC’s ongoing scrutiny of the Litecoin ETF proposal by Canary Capital underscores the regulatory uncertainty still enveloping the cryptocurrency market. As public comments are solicited and deliberations continue, stakeholders in the crypto industry will be watching closely to see how this dynamic unfolds and whether it will pave the way for future ETF approvals. For now, Litecoin proponents remain hopeful that the regulatory tide may turn favorably before the year concludes.
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