The U.S. Securities and Exchange Commission (SEC) has once again deferred its decision on Canary Capital’s proposal for a spot Litecoin (LTC) exchange-traded fund (ETF). On Monday, the regulatory body announced this delay, requesting public input on whether the proposal satisfactorily addresses potential fraud and manipulation concerns. This decision arrives amid heightened interest in the possibility of a crypto ETF, a move that many argue could lend legitimacy and accessibility to the cryptocurrency market.
Market Reactions and Expert Insights
Here’s the catch: The SEC’s hesitation comes after it postponed decisions on several other spot crypto ETF applications last week, including those for XRP, Hedera, and Dogecoin. The delay in responding to the Litecoin ETF proposal had initially sparked optimism among investors, who speculated that the SEC might have been considering a different approach for this particular application. However, the announcement on the official deadline has quashed these hopes, at least for the time being. This follows a pattern of institutional adoption, which we detailed in Nasdaq Seeks SEC Approval to List 21Shares Dogecoin ETF.
According to the SEC’s filing, the agency is particularly interested in whether the proposed listing and trading of shares in the Litecoin Trust could thwart fraudulent activities or introduce any unique challenges that have not been addressed in past considerations. “The Commission seeks comment on whether the proposal… is designed to prevent fraudulent and manipulative acts and practices,” the filing states.
Industry experts are weighing in on the implications. Eric Balchunas, a senior ETF analyst at Bloomberg, described the current regulatory climate as “a pivotal moment for crypto ETFs.” He noted that the market is watching closely to see how newly appointed SEC Chair Paul Atkins—who stepped into his role in April—will navigate these decisions. Balchunas has characterized Atkins’ leadership as a “huge variable” that could significantly influence the future of crypto ETFs.
Canary Capital’s Ambitions and Market Context
Canary Capital, founded by former Valkyrie Funds co-founder Steven McClurg, submitted its initial paperwork for the Litecoin ETF back in October. Litecoin, with a market cap of $6.6 billion, is an open-source blockchain project based on Bitcoin’s code. This heritage, coupled with the fact that Litecoin is among the older and more established cryptocurrencies, has fueled speculation that it might be a strong candidate for ETF approval. As explored in our recent coverage of Litecoin Surges 7% as SEC Likely to Approve Spot ETF with 90% Odds: Analyst, the anticipation was palpable, with many industry watchers suggesting that the approval of a Litecoin ETF could serve as a bellwether for other crypto assets seeking similar recognition.
However, the broader crypto market is no stranger to regulatory challenges. The SEC’s cautious approach reflects ongoing concerns about market manipulation, investor protection, and the potential systemic risks posed by the rapid growth of digital assets. Each delay serves as a stark reminder of the complex landscape that crypto companies must navigate to achieve institutional acceptance.
Looking Forward: Unresolved Questions and Potential Outcomes
So, what does this mean for investors and the crypto market at large? The SEC’s call for public comments suggests that the agency is still grappling with how to integrate cryptocurrencies into the traditional financial system without compromising its regulatory standards. This open call for commentary could be interpreted as a step towards a more transparent and inclusive decision-making process, or it could be seen as a stalling tactic in the face of mounting pressure.
Either way, the market’s response will be telling. Will the delay dampen investor enthusiasm, or could it galvanize further debate and engagement from stakeholders eager to shape the future of crypto ETFs? The answers remain elusive, but one thing is clear: the SEC’s decisions in the coming months could set significant precedents for the burgeoning crypto market.
As we move deeper into 2025, the crypto world will be watching closely—waiting, analyzing, and perhaps most importantly, commenting. After all, the future of cryptocurrency as a mainstream financial instrument may well hinge on these pivotal regulatory decisions. Stay tuned.
Source
This article is based on: SEC Further Delays Litecoin ETF, Requests Public Comments
Further Reading
Deepen your understanding with these related articles:
- Crypto Coalition Tells SEC Staking Is ‘Essential Good,’ Not a Security
- The SEC Can Learn From the IRS in Making Regulation Simpler for Crypto
- UK’s FCA Seeks Public and Industry Views on Crypto Regulation
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
