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Oct 17, 2024

Canary Capital files S-1 application for first spot Litecoin ETF in the US

Nashville-based asset manager Canary Capital filed an S-1 form for a Litecoin (LTC) exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC) on Oct. 15. Canary’s filing is the

Nashville-based asset manager Canary Capital filed an S-1 form for a Litecoin (LTC) exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC) on Oct. 15.

Canary’s filing is the first application for a Litecoin-linked spot ETF in the US and comes less than a week after the asset manager’s XRP ETF filing on Oct. 8.

Canary Capital CEO and founder Steven McClurg was previously Valkyrie Investments chief investment officer, having co-founded the asset manager along with Leah Wald.

Alex Thorn, head of research at Galaxy Digital, told CryptoSlate that Litecoin is generally considered to have been a “fair launch,” meaning there was no pre-mine or token sale.

Additionally, because Litecoin is based on a proof-of-work consensus model, there was no offering of LTC by any entity to public or private investors. Thorn added:

“The SEC hasn’t stated its position on the matter, but it’s unlikely that Litecoin could be considered to have been offered as a security since there was no offering at all. Thus, issuers should theoretically have the same pathway to launch spot-based Litecoin ETFs in the United States as they did for Bitcoin.”

According to Thorn, the same cannot be said about spot Solana ETFs since the blockchain is based on a proof-of-stake consensus algorithm and conducted a token sale.

Thorn stated that this makes the initial launch fact pattern of Solana different from Bitcoin and Litecoin. Furthermore, the SEC currently alleges in its lawsuit against Coinbase that SOL is a “crypto asset security.”

Thorn said:

“[This] is why some analysts have suggested that SOL ETF filings are bets on a Trump victory in November, as a change in the SEC’s approach to classifying crypto assets as securities would likely be required before the agency would approve the listing of SOL ETFs.”

According to Bloomberg ETF analyst James Seyffart, ETPs like CoinShares’ LITE in Switzerland and ETC Group’s ELTC in Germany already hold Litecoin. Meanwhile, the US market is currently only tapped by the Grayscale Litecoin Trust (LTCN).

According to a CoinShares report, the LTC funds offered in Europe hold $11.5 million in combined assets under management (AUM), which represents less than 10% of the total AUM of Litecoin-related ETPs globally.

Meanwhile, LTCN has $127.4 million in AUM, which makes up the remaining 93% of the money invested in Litecoin-related ETPs worldwide.

Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).

AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.

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