SEC Recognizes Canary's Litecoin ETF Proposal: A Step Towards U.S. Altcoin ETF Listing

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

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 firm also applied to launch an XRP-based ETF less than a week prior to the Litecoin ETF filing.

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 altcoin ETF. The SEC has opened a 240-day window for public feedback on the proposal, during which it will consider approving the ETF more rapidly or using the entire review period.

Nasdaq submitted its application for the spot Litecoin fund on January 15 through a 19b-4 filing, acting 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.

The Canary Litecoin ETF aims to eliminate technological hurdles that have historically irked mainstream investors by providing Litecoin exposure through standard brokerage accounts. The ETF is designed to track the CoinDesk Litecoin Price Index (LTX) and hold Litecoin through a comprehensive custody framework. Its hybrid model 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 Wednesday, the SEC stated that it will solicit public feedback and requested comments to be submitted within 21 days after the publication in the Federal Register.