Litecoin Spot ETF Timing: Will the SEC Approve an LTC Fund?

Key Takeaways

• Three firms applied for a Litecoin ETF.
• The SEC has 240 days to respond.
• Investors can now trade LTC ETPs.

Excitement is building around Litecoin (LTC), which is emerging as a strong contender for approval as the next crypto asset to receive an exchange-traded fund (ETF).

With rivals like XRP and Solana (SOL) still awaiting regulatory decisions, Litecoin’s lack of legal drama has sparked speculation that it could soon claim this milestone.

Investors and industry experts alike are closely watching and eager to see if Litecoin can secure its place alongside Bitcoin (BTC) and Ethereum (ETH).

Litecoin Next in Line

Bloomberg’s ETF expert James Seyffart recently highlighted that the U.S. Securities and Exchange Commission (SEC) has provided feedback on the S-1 registration document for a potential LTC ETF.

The S-1 form, a key regulatory filing, outlines the financial details of a company or fund before an exchange-traded fund (ETF) can be approved.

Seyffart noted, “Canary just filed an amended S-1 for their Litecoin ETF application. No guarantees—but this might be indicative of SEC engagement on the filing.”

Seyffart’s colleague, Eric Balchunas, who is also an ETF expert, weighed in, saying , “We had heard chatter that the Litecoin S-1 had gotten comments back from SEC. This looks to confirm that, which bodes well for our prediction that Litecoin is most likely to be the next coin approved.”

Balchunas also emphasized that the new SEC chair has not yet taken office, which could be an important factor to consider.

SEC Deadline Looms

Currently, three firms—Canary Capital, Grayscale, and CoinShares—have submitted applications for a spot Litecoin (LTC) ETF.

The SEC’s formal review process only begins once an exchange, such as Nasdaq or Cboe, submits a 19b-4 filing to support the ETF’s listing.

On Jan. 15, Nasdaq officially filed to list the spot LTC ETF applications, triggering the regulatory countdown.

With the review process now underway, the SEC has 45 days to issue an initial response and up to 240 days to deliver a final decision.

This timeline suggests that initial responses to most LTC ETF applications could arrive by March 2025, with final rulings expected by September 2025.

LTC ETF Launch Conditions

The launch of a Litecoin ETF depends on meeting regulatory requirements set by the U.S. SEC.

To begin, the issuer must submit an S-1 registration, which provides crucial financial disclosures and outlines the management of Litecoin assets.

The SEC requires assurances that Litecoin is sufficiently liquid and resistant to market manipulation, along with a secure custodial solution to safeguard investor assets.

Transparency is key; the ETF must offer regular updates on its holdings and performance. It must also adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations and establish market surveillance arrangements to ensure fair trading practices.

Additionally, the ETF must secure partnerships with authorized participants and market makers to ensure liquidity and smooth market operations.

Factors like having mature futures products, exchange-traded products (ETPs), and no legal drama also play an important part.

Ultimately, regulatory clarity from bodies like the SEC and Commodity Futures Trading Commission (CFTC) is essential to guarantee the fund’s stability and protect investor interests.

Eyes on LTC

LTC surged past the $120 mark for the first time since Dec. 17, driven by a mix of macroeconomic factors and market speculation.

The boost came from reports suggesting U.S. President Donald Trump might issue executive orders favoring the crypto market and news surrounding ETF developments. This rally has seen LTC rise by 17%.

Speculation that Litecoin could be the next asset to receive ETF approval under the Trump administration has also played a pivotal role in the price surge.

As a result, LTC’s trading volume has skyrocketed, climbing from $450 million to $1.62 billion.

Further fueling the rise, large Litecoin holders have become more active, with addresses holding between 1 million and 10 million LTC, increasing by 220,000 in just two days. On-chain data and technical indicators point to growing buying pressure.

LTC’s price broke out from recent consolidation and is testing key resistance levels. If it manages to break above the $126.45 threshold, a target of $150 could be within reach. However, if the resistance holds, a pullback to $87.22 may follow.

LTC ETF Filings

Grayscale Joins LTC ETF Race

Grayscale has officially joined the competition for spot LTC ETFs. The fund will build on the foundation of Grayscale’s existing Litecoin Trust.

In its latest submission, Grayscale tackled prior regulatory concerns head-on, providing comprehensive details about the ETF’s structure, custody solutions, and compliance protocols.

The New York Stock Exchange has also filed to list Grayscale’s LTC ETF, signaling strong institutional backing for the proposal once it secures regulatory approval.

CoinShares Bets On LTC

CoinShares has also filed an application for a Litecoin ETF.

“The ETF allows investors a cost-effective way to invest in Litecoin without owning it directly,” the firm said in its filing.

Shares are issued in blocks of 5,000, called “Baskets,” to authorized participants and traded on the Nasdaq. The initial share price is set to facilitate secondary market trading.

CoinShares acts as the sponsor, while CSC Delaware Trust Company is the trustee. Other roles, including transfer agent, administrator, and custodian, are yet to be disclosed.

Canary Files Litecoin ETF S-1

Canary Capital was the first to for a spot LTC ETF, making its move on Oct. 14, 2024.

The firm submitted an S-1 registration statement to the SEC days after it applied for an XRP ETF.

The SEC has up to 240 days. If approved, it would mark a milestone for the crypto industry by offering investors a regulated way to invest in Litecoin.

While the SEC is cautious with crypto, Litecoin’s clearer regulatory record, compared to assets like Ripple and Solana, may work in its favor.

Nasdaq Files 19b-4

Following Canary Capital’s re-filing, Nasdaq listed its 19b-4 form with the SEC on Jan. 15.

Exchanges need to file 19b-4 forms to list funds like a spot LTC ETF.

“This 19b-4 filing from Nasdaq gets things rolling downhill with the SEC, but the SEC still has to acknowledge the filing, which typically happens within a couple of weeks,” said Bloomberg Intelligence’s James Seyffart.

“If or when the SEC acknowledges this filing, we will have a more definitive idea of timelines for a potential denial or approval,” Seyffart added.

Litecoin Available Instruments

While a dedicated Litecoin (LTC) ETF has yet to launch, investors can still gain exposure to the asset through various financial instruments.

These options include Litecoin trusts, exchange-traded products (ETPs), and derivatives like futures contracts, all of which allow participation in LTC’s price movements without directly purchasing or holding the asset.

A prominent example is the Grayscale Litecoin Trust , which provides a method for investors to gain exposure to LTC while sidestepping the complexities of direct ownership.

The trust’s shares mirror Litecoin’s price, offering investors a proportional stake in the token’s value.

Launched on March 1, 2018, the trust began trading on the over-the-counter (OTC) market on Aug. 18, 2020. It comes with a management fee of 2.50%, though it does not impose performance fees or distribution frequencies.

In addition, several crypto-focused investment funds incorporate Litecoin into their portfolios, providing another avenue for those seeking indirect exposure.

For now, these alternatives give investors the chance to benefit from Litecoin’s market movements while waiting for a potential ETF approval.