SEC Delays Litecoin ETF Decision

By delaying taking action on an exchange-traded fund (ETF) for Litecoin, the Securities and Exchange Commission (SEC) is signaling that decisions on many other prospective ETFs will take longer than hoped.

Yesterday, the SEC bounced its decision on whether to approve Canary Funds’ Litecoin ETF proposal from May 5 to mid-June at the earliest. By giving the public three weeks to comment on whether the ETF should be allowed, and two more weeks for rebuttals of those comments, the SEC is giving itself more time to decide whether to approve the Litecoin ETF.

This is significant because, as a Bitcoin clone, Litecoin is considered highly likely to be the first new ETF approved beyond the current crop of Bitcoin and Ether ETFs — although perhaps after some proposed combined BTC and ETH ETFs. Bloomberg ETF analyst James Seyffart gives the Litecoin ETF a 90% likelihood of being approved this year.

On May 4, the day before the deadline, Seyffart said, “If any asset has a chance of early approval, it’s Litecoin.”

No Surprise

“This is a process we’ve seen before for ETF approvals, so it comes as no surprise that the SEC decided to delay a Litecoin ETF,” said Patrick Gerhart, president of banking operations for Telcoin and a former political consultant, in an email to The Defiant.

“That being said, I think this approval dampened some high hopes the industry had about altcoin ETFs having a quicker approval process under a pro-crypto administration. Hopefully, one reason for this delay is that the agency wants to take a nuanced approach to each type of crypto ETF,” he said.

Gerhart noted that while Bitcoin has been around for a long time and is considered more legitimate in the eyes of regulators, they’re still learning about how other digital assets work.

“This shows that the SEC is taking an effort to educate themselves more on crypto and make a thought-out decision and create the foundation for altcoin ETFs to be approved,” he added.

The recent change in leadership is likely a cause for delay, SOL Strategies CEO Leah Wald told The Defiant in an email.

“The recent SEC leadership transitions, including Commissioner [Paul] Atkins joining just weeks ago, likely contribute to a deliberate pace as consistent evaluation criteria are established,” she said.

New Pro-crypto SEC

With new pro-crypto leadership at the SEC, positive action on the more than 70 ETF proposals before the Commission is widely expected. How soon that will happen is another question.

While that 90% likelihood is shared by Solana and various “basket” ETFs, Litecoin’s similarity to Bitcoin means it has always been seen as the probable first new ETF.

After those three, Ripple (XRP) is next, with 85% odds, followed by Dogecoin and Hedera at 80% and Avalanche, Cardano and Polkadot at 75%, according to Seyffart.

It should be noted that the ETF experts, Seyffart and Bloomberg senior ETF analyst Eric Balchunas, are making all their bets assuming approvals by the end of the year, not just the summer.

And if Litecoin doesn’t get early approval, the chances of anything else coming before it are slim.