SEC Requests Further Comments Before Approving Litecoin ETF

The U.S. SEC has delayed its decision on Canary Capital’s proposed spot Litecoin ETF, citing the need for additional public commentary.

The regulator is reviewing whether the application complies with standards aimed at preventing fraud and market manipulation, and it raised concerns about potential risks to investor protection if the ETF is approved without further assessment.

The ETF filing comes from Canary Capital, launched by Steven McClurg, a former co-founder of Valkyrie Funds. Submitted in October 2024, the proposal outlines a vehicle for directly acquiring and custodianing Litecoin (LTC), offering investors a regulated pathway to profit from the cryptocurrency’s price volatility. Litecoin currently holds a market cap of over $6 billion.

The SEC’s hesitation is part of a familiar pattern. Last week alone, the commission hit pause on ETF proposals involving XRP, Dogecoin, and Hedera. These delays aren’t unusual—they’re part of the standard playbook to gather extra input and give industry players more time to respond to open questions.

Multiple altcoin-based ETF applications—covering assets like Solana, XRP, and Cardano—are currently pending with the SEC. Investment firms such as Bitwise, Franklin Templeton, Grayscale, and 21Shares have all filed proposals. According to analysts, Litecoin is currently viewed as the most likely altcoin to receive the commission’s next approval for a spot ETF in the United States.

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The recent surge in ETF submissions was directly influenced by the SEC’s long-awaited approval of spot Bitcoin ETFs—among the most rapidly capitalized funds in U.S. market history. Ethereum ETFs followed a few months later. Until then, Bitcoin-related applications had remained stalled, generating a prolonged period of regulatory ambiguity and speculation among institutional investors.

One thing is clear: the deferral highlights the SEC’s deliberate posture under the leadership of Chairman Paul Atkinson. The agency is in no rush to greenlight new ETFs, instead opting to confirm that regulatory loopholes are closed and mechanisms to prevent market abuse are fully in place before issuing its verdict.

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The delay extends a cloud of uncertainty for institutional investors and funds looking to enter the Litecoin space. Until the SEC clarifies its stance, long-term allocation plans will remain on ice. The Commission is anticipated to finalize its decision within a matter of weeks, once it reviews the submitted commentary.