SEC Delays Decision on Canary Capital’s Litecoin ETF, Seeks Public Input

The U.S. Securities and Exchange Commission (SEC) has deferred its decision on Canary Capital’s proposed spot Litecoin (LTC) exchange-traded fund (ETF), announcing on May 5, that it will seek public feedback to evaluate the proposal’s regulatory compliance. The delay follows similar postponements for ETF applications tied to XRP, Hedera, and Dogecoin, signaling ongoing scrutiny of altcoin-based financial products.

In its latest filing, the SEC stated it is assessing whether Canary Capital’s Litecoin ETF is structured to “prevent fraudulent and manipulative acts and practices” and whether it introduces “new or novel concerns” compared to prior crypto ETF applications. The agency has opened a 21-day public comment period, starting from the filing’s publication in the Federal Register, to gather input on these issues.

Canary Capital, founded by former Valkyrie Funds co-founder Steven McClurg, filed its S-1 registration for the Litecoin ETF on October 14, 2024, aiming to track the CoinDesk Litecoin Price Index (LTX) by directly holding LTC. Nasdaq’s 19b-4 filing, submitted on January 16, 2025, was acknowledged by the SEC on January 29, 2025, triggering a 240-day review clock that could see a final decision by September 2025.

Canary Capital is not alone in its pursuit of a spot Litecoin ETF. As of May 2025, three firms—Canary Capital, Grayscale Investments, and CoinShares—have submitted applications to the SEC for spot Litecoin ETFs, reflecting growing institutional interest in regulated LTC investment vehicles.

Litecoin, launched in 2011 by Charlie Lee, is a proof-of-work blockchain forked from Bitcoin, designed for faster transactions with a block time of 2.5 minutes and lower fees. It has a capped supply of 84 million LTC, with approximately 75.8 million in circulation as of now. As of May 2025, Litecoin’s market capitalization stood at $6.25 billion, ranking it 25th among cryptocurrencies, according to Coingecko.

Despite analysts anticipating a potential delay in the SEC’s approval of a Litecoin (LTC) ETF, the market had maintained a relatively optimistic outlook on its approval prospects. Just a week prior, the SEC announced delays for a series of altcoin ETF applications, including those for Solana (SOL) and XRP, pushing their decisions to June, but notably omitted any mention of the Litecoin ETF. This omission was interpreted by some as a signal that the SEC might treat the Litecoin ETF differently from other altcoin ETFs. Bloomberg ETF analyst James Seyffart commented on X the day before the announcement, stating, “If any asset has a chance of early approval it’s Litecoin IMO. Personally think a delay is more likely but def something to watch.” Fueled by this optimism, the news of the Litecoin ETF’s delayed approval led to a 6% price drop for LTC, falling from $87.6 to $82.27.

The SEC’s cautious approach reflects broader challenges in approving altcoin ETFs, particularly amid unresolved questions about market manipulation and custody. The agency’s new chair, Paul Atkins, appointed in April, has yet to oversee a major crypto ETF decision, adding uncertainty to the process. The public comment period will allow stakeholders to address these concerns, potentially shaping the SEC’s final decision.