A Nashville-based asset manager, Canary Capital, has filed an S-1 form with the US Securities and Exchange Commission (SEC) for a Litecoin (LTC) exchange-traded fund (ETF) on October 15. This marks the first application for a Litecoin-linked spot ETF in the US and comes shortly after Canary’s XRP ETF filing on October 8. Canary Capital’s CEO and founder, Steven McClurg, previously served as Valkyrie Investments’ chief investment officer and co-founded the asset manager with Leah Wald.
Litecoin is considered to have had a “fair launch” as there was no pre-mine or token sale involved. Additionally, since Litecoin is based on a proof-of-work consensus model, there was no offering of LTC to public or private investors. Alex Thorn, head of research at Galaxy Digital, stated that Litecoin issuers should theoretically have the same pathway to launch spot-based ETFs in the US as they did for Bitcoin. However, Thorn noted that this may not be the case for spot Solana ETFs, as Solana conducted a token sale and is based on a proof-of-stake consensus algorithm.
The market for Litecoin ETFs is currently dominated by Grayscale’s Litecoin Trust (LTCN) in the US, with $127.4 million in assets under management (AUM). In Europe, ETPs like CoinShares’ LITE and ETC Group’s ELTC hold a combined $11.5 million in AUM for Litecoin. These European funds represent less than 10% of the total AUM for Litecoin-related ETPs globally. There is a growing interest in launching new ETFs for cryptocurrencies like Litecoin and Solana, with regulatory considerations and market dominance playing a significant role in the process.
The SEC has not yet stated its position on whether Litecoin is considered a security, but analysts believe that it is unlikely as there was no offering involved. However, the SEC’s lawsuit against Coinbase alleging that SOL is a “crypto asset security” may impact the approval of Solana ETFs. Some analysts suggest that SOL ETF filings are bets on a potential change in the SEC’s approach to classifying crypto assets as securities. This uncertainty could affect the approval of new ETFs in the future, including those for Litecoin and Solana, in the US market.
Overall, the demand for cryptocurrency ETFs, including those for Litecoin and Solana, is rising as more investors seek exposure to digital assets through regulated investment vehicles. With Canary Capital’s recent filings for Litecoin and XRP ETFs, there is a growing interest in expanding the range of cryptocurrency offerings in the US market. Grayscale currently dominates the market for Litecoin ETPs, but new filings and regulatory developments could change the landscape for investors looking to add digital assets to their portfolios.
