Litecoin ETF Sparks Crypto Frenzy: Will New SEC Boss Unleash Billion-Dollar Rally?

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Is Canary Capital’s filing for a Litecoin ETF another competitor in the running, and could the change in SEC leadership potentially provide Litecoin with an advantage against Solana and Ripple?

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Litecoin joins the ETF race

There could be a fresh competitor emerging in the race for U.S.-based crypto ETFs, with Litecoin (LTC) potentially stepping into the arena.

On the 16th of January, Canary Capital, a company specializing in digital assets and cryptocurrency fund management, submitted an updated registration form (S-1) for a potential Litecoin exchange-traded fund. This news was recently announced by Bloomberg ETF analyst, James Seyffart.

Recently, Canary Funds submitted an updated version of their Litecoin ETF application. This could potentially signal that the SEC is actively considering their filing, but it’s essential to remember that there are no guarantees just yet. The crucial 19b-4 filing, which initiates the potential approval or denial process, has not been filed as of now. Credit to Isabelle Tan for this insight.

— James Seyffart (@JSeyff) January 15, 2025

A revised S-1 submission indicates that the company is diligently working to resolve regulatory issues, typically integrating suggestions from the Securities and Exchange Commission. Although this doesn’t ensure approval, it implies continuous communication with regulators.

Yet, a vital action remains pending – submitting the 19b-4 filing – that’s essential because its completion triggers the start of the SEC’s approval or rejection process.

As a researcher, I find myself optimistic about my hypothesis that Litecoin could be the next digital currency to receive approval, given Bloomberg ETF analyst Eric Balchunas’ statement. However, it’s crucial to acknowledge the significant uncertainty surrounding this prediction due to the upcoming changes in leadership at the SEC, which he referred to as a “huge variable.

It appears that there have been rumors circulating about the Litecoin S-1 receiving feedback from the Securities and Exchange Commission (SEC). This seems to support our assumption that Litecoin could be the next digital coin to receive approval. However, it’s important to note that a new SEC chair has not yet taken office, which is a significant factor that could influence the outcome.

— Eric Balchunas (@EricBalchunas) January 15, 2025

In essence, Exchange-Traded Funds (ETFs) provide investors with an indirect way to invest in assets such as cryptocurrencies. If granted, the Litecoin ETF would be the third crypto-focused ETF in the U.S., coming after Bitcoin (BTC) and Ethereum (ETH).

It appears that the market is showing a reaction to these rumors. The price of LTC surged more than 16% in the last 24 hours (as of Jan. 16), reaching $117.92, positioning it as the fourth-largest increase among the top 100 cryptocurrencies by market value.

As reported by the on-chain analysis company Santiment, the current surge in price appears to be driven predominantly by significant investors (referred to as “whales”), who possess at least 10,000 LTC. Over the past nine days, these whales have amassed approximately 250,000 coins.

🌞 Litecoin has broken free from other cryptocurrencies, experiencing a substantial 16.1% increase in market value over the past 11 hours alone. This trend resembles what occurred back in early December, and it seems that large investors with at least 10,000 Litecoins, often referred to as “whales” or “sharks,” are behind this rise. In fact, these whales have acquired approximately 250,000 Litecoins since January 9th. 🐳🦈

— Santiment (@santimentfeed) January 15, 2025

Santiment pointed out that “Litecoin appears to have separated itself from other alternative cryptocurrencies,” suggesting that its current surge might not just be short-lived.

Solana and XRP lead the way

The competition for Cryptocurrency Exchange-Traded Funds (ETFs) in the United States is becoming more intense, with Litecoin joining the mix, but it seems that Solana (SOL) is making greater progress in the approval process.

Five significant companies including VanEck, Grayscale, 21Shares, Bitwise, and Canary Capital have submitted 19b-4 forms for Solana Spot Exchange Traded Funds (ETFs) as early as November. These applications are now undergoing formal review by the Securities and Exchange Commission (SEC), making Solana an earlier contender in the race for potential approval compared to Litecoin.

The application deadlines are drawing near; the initial response for Grayscale’s Solana ETF is required by January 23rd.

As a crypto investor, I’m closely watching the developments with the four other issuers, such as VanEck and Bitwise. They have until January 25th to receive preliminary decisions from the SEC, which marks the end of a 45-day formal review period.

In other words, it’s important to note that the Securities and Exchange Commission (SEC) might not approve these proposals. The SEC has traditionally shown caution towards spot Bitcoin ETFs, particularly when they involve assets lacking a well-established, regulated futures market.

During Chair Gary Gensler’s tenure, the agency has consistently stated that they won’t approve any exchange-traded funds (ETFs) focused on spot cryptocurrencies unless there exists a well-matched, regulated futures market for the underlying asset.

Bitcoin and Ethereum fulfill this condition by having futures markets available on the Chicago Mercantile Exchange, whereas Solana lacks this type of infrastructure at present.

Simultaneously, the competition for a place in the Ripple (XRP) ETF is gathering momentum. Currently, four companies – WisdomTree, Bitwise, 21Shares, and Canary Capital – have submitted their applications. Notably, WisdomTree’s application is awaiting a response from the SEC by January 16th.

The potential rewards are substantial. Financial titan JPMorgan predicts that the initial-year earnings for Solana and XRP ETFs could reach as high as $14 billion collectively. Analyst Matthew Sigel of VanEck echoed this estimation regarding X.

The trading of SOL and XRP Exchange-Traded Products (ETPs) could potentially attract between $3 billion and $8 billion each, according to recent estimates. After their first year in operation, these ETP assets currently account for around 6% and 3%, respectively, of the total market capitalization of Bitcoin ($1,874 billion) and Ethereum ($395 billion).

— matthew sigel, recovering CFA (@matthew_sigel) January 13, 2025

Regarding Solana, estimates indicate it might draw in between $3 billion and $6 billion. In comparison, XRP may possibly pull in around $4 billion to $8 billion.

Balchunas expressed an opinion about the projections, stating that even though his group has not officially made any predictions, the estimations from JPMorgan appear to be sensible.

According to JPMorgan, it is estimated that an altcoin ETF could attract around $14 billion in investments during its first year, with Solana and XRP potentially drawing between $3-6 billion and $4-8 billion respectively. However, my team has not yet made any official forecasts on this matter. We need to secure the necessary approvals before we can make such predictions. The news comes from Isabelle Lee on Twitter.

— Eric Balchunas (@EricBalchunas) January 14, 2025

It is uncertain which cryptocurrency, Solana, XRP, or Litecoin, will overcome the Securities and Exchange Commission’s obstacles first, or if Litecoin might take the lead instead. This is a question that remains to be seen.

Gensler out, Atkins in: What this means for crypto ETFs

As a crypto investor, I’m excitedly watching the evolution of our industry, as it appears to be on the verge of a significant regulatory transformation. The new leadership at the Securities and Exchange Commission (SEC) seems to be preparing for a comprehensive revamp, which could bring about substantial changes in how we operate.

January 20th marks the departure of Gary Gensler, who is recognized for his firm approach towards cryptocurrency regulations, as he leaves his position as Chair of the SEC.

Gensler’s resignation occurred around the same time Donald Trump took office as the 47th President of the United States, marking a fresh start for the Securities and Exchange Commission (SEC) under the guidance of Paul Atkins, who was appointed chairman by Trump.

Previously serving as an SEC commissioner, Atkins is generally viewed as a champion of cryptocurrencies. Unlike Gensler’s term marked by intense enforcement, which saw the SEC bring more than 80 cases against crypto companies, primarily accusing numerous tokens of being unregistered securities, Atkins’ approach is anticipated to differ significantly.

Advocates of Gensler maintain that his actions were essential for combating deception and market manipulation, but detractors counter that his methods hindered innovation and fostered a climate of regulatory ambiguity.

Under the new administration, there seems to be a shift towards a more moderate stance. Atkins, it’s predicted, will work hand-in-hand with Republican SEC commissioners Hester Peirce and Mark Uyeda, who have frequently spoken out against Gensler’s policies.

One significant change being discussed is the potential action by the SEC to halt or rescind investigations that don’t involve fraud accusations. Should this occur, it would represent a substantial shift away from Gensler’s tough enforcement approach, providing an opportunity for the industry to restore trust with regulators.

Consequently, the importance is significantly increased for the development of cryptocurrency ETFs, an area that might witness expedited endorsements under the fresh administration at the Securities and Exchange Commission.

Keeping an eye on the developments, as ETFs backed by Litecoin, Solana, and XRP await regulatory decision, everyone is eagerly waiting to see if Atkins’ move will create a friendlier landscape in the industry.

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2025-01-16 19:39