Canary Capital seeks approval from SEC for a spot Litecoin ETF

Canary Capital filed a registration statement with the U.S. Securities and Exchange Commission for a Litecoin LTC +3.37% exchange-traded fund, days after doing the same for an XRP product.

The crypto investment firm filed an S-1 registration statement on Tuesday for the Canary Litecoin ETF. The fund seeks "to provide exposure to the price of LTC held by the Trust," according to the filing . A custodian and administrator were not named.

Steven McClurg founded Canary Capital and previously founded Valkyrie Funds, which has other spot crypto ETFs.

In a statement, Canary Capital said Litecoin plays a "leading role in the broader cryptocurrency ecosystem" and so will be "attractive to a wider range of institutional investors."

"Canary believes that Litecoin presents a unique and compelling opportunity for investors seeking exposure to a time-tested and reliable cryptocurrency," the firm said in an emailed statement. "As one of the longest-running blockchains with 100% uptime since its inception, Litecoin has demonstrated a proven track record of security and reliability with significant enterprise-grade use cases."

Some exchange-traded products hold Litecoin, including one from CoinShares in Switzerland and a Grayscale trust in the U.S., said Bloomberg ETF analyst James Seyffart in a post on X.

Seyffart also noted that Litecoin could be similar in the regulatory sense to Bitcoin. The SEC approved spot bitcoin ETFs earlier this year.

"I think Litecoin is likely to have similar regulatory status as Bitcoin as a commodity due to the fact that it forked off of Bitcoin," Seyffart said in a statement to The Block. "That said -- to get an ETF approved under the current administration there needs to be a sizeable and liquid futures market that is federally regulated in the US. Litecoin doesn't fit that requirement right now."

Upcoming presidential elections could have an effect. Former President Donald Trump has been viewed as friendly to the industry and has said he would fire SEC Chair Gary Gensler.

"So I think this is largely a bet on a potential Trump victory and a change in leadership at the SEC," Seyffart said. "We would still need to see a 19b-4 filing before any clocks start ticking for an SEC response."

A 19b-4 filing is a document filed by exchanges on behalf of issuers and once filed, starts the clock on the SEC's approval process.

Canary Capital filed an S-1 registration statement for a spot XRP ETF earlier this month and Bitwise filed for a similar product as well. A spot XRP ETF has not been approved by the SEC before, and if it does, it could face challenges. The SEC has been embroiled in a legal fight with Ripple after the agency accused the company of raising $1.3 billion through the sale of XRP, which it views as an unregistered security.