"SEC Recognizes Canary's Litecoin ETF Proposal, Paving Way for U.S. Listing"

The Securities and Exchange Commission (SEC) has acknowledged Canary Capital's Litecoin ETF proposal, marking a significant step towards a potential U.S. listing for an altcoin-based exchange-traded fund (ETF). This is the first altcoin ETF filing to receive such recognition, according to Bloomberg Senior ETF Analyst Eric Balchunas.

Litecoin, often referred to as the "silver to Bitcoin's gold," has a long operating history and shares similarities with Bitcoin's structure, making it a logical next step for an ETF. Canary Capital filed its S-1 registration with the SEC in October, expressing its intention to provide investors with a unique opportunity to gain exposure to Litecoin through a traditional brokerage account.

The SEC has opened a 240-day review period for the ETF application, during which it will consider public feedback. Balchunas suggests that the SEC could approve the ETF more rapidly, given the progress made in meeting regulatory requirements. This development 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 2024.

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 to file proposed rule changes with the SEC, ensuring transparency and compliance with investor protection standards through public disclosure and comment periods.

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.

The SEC is currently soliciting public feedback on the Canary Litecoin ETF proposal to advance the approval or rejection process. According to a document released on