Litecoin speeds around the bend, targeting the next ETF, while altcoin ETF applications may accelerate due to the Trump administration coming to power
It is worth noting that the SEC has never regarded Litecoin as a security. With the Trump administration about to take office, the market is full of expectations regarding the regulatory direction for future altcoin ETFs, especially concerning the approval of altcoin ETFs such as Litecoin, Solana, and XRP.Author: Weilin, PANews
On January 17, Nasdaq submitted the 19b-4 form for Canary Funds' Litecoin spot ETF, marking the official start of the 240-day review period for this application. During this process, the Securities and Exchange Commission (SEC) will have the authority to approve, reject, or request additional information. Meanwhile, Bloomberg analyst James Seyffart revealed that Canary Funds has submitted a revised S-1 filing for the Litecoin ETF application, suggesting that the SEC may have begun its review. New developments have emerged for the Litecoin ETF in the two-step approval process required for ETFs.
With the Trump administration set to take office, the market is eagerly anticipating the regulatory direction for future altcoin ETFs, particularly regarding the approval of Litecoin, Solana, and XRP altcoin ETFs.
Nasdaq Submits 19b-4 Form for Canary's Litecoin ETF
On January 17, Nasdaq submitted the 19b-4 form for Canary Funds' Litecoin ETF application. The document indicates that U.S. Bancorp Fund Services, LLC will serve as the manager, and U.S. Bank N.A. will be responsible for holding the ETF's cash. According to the document, Coinbase Custody Trust Company LLC will hold the Litecoin for the ETF.
According to SEC regulations, the submission of this form initiates a 240-day approval cycle. During this period, the SEC will decide whether to approve the application or request further information. "This 19b-4 filing from Nasdaq pushes the process internally at the SEC, but the SEC still needs to confirm the filing, which typically happens within a few weeks," Bloomberg ETF analyst James Seyffart stated. "If or when the SEC confirms this filing, we will have a clearer understanding of the potential timeline for rejection or approval."
"Bitcoin gold, Litecoin silver," is an old slogan in the crypto community. Litecoin is a fork of Bitcoin, meaning its protocol follows the same basic rules as Bitcoin; for example, it uses a Proof-of-Work consensus mechanism. Originally created by Charlie Lee in 2011, Litecoin primarily targets small transactions, and its core developers have relatively less direct intervention, which enhances its "decentralization" characteristic. Notably, the SEC has never classified Litecoin as a security, unlike larger market cap cryptocurrencies like SOL and XRP, which the SEC has referred to as "securities," indicating that LTC has certain advantages in the approval process.
As of 2 PM on January 17, Litecoin's market cap was $10.48 billion, ranking 19th among cryptocurrencies according to CMC data, with a 16% price increase in the past 24 hours. This growth trend makes the approval of the Litecoin ETF more attractive, especially since the SEC has not classified Litecoin as a security.
The 19b-4 form is the second part of the two-step approval process for ETFs, following the revised S-1 form submitted by Canary Capital on Wednesday. On January 16, Canary Funds submitted the revised S-1 filing for the Litecoin ETF application. Analyst James Seyffart stated that while it cannot be guaranteed, this may indicate that the SEC is involved with this document, and this development is a positive signal for predicting that the Litecoin ETF is more likely to be approved.
Bloomberg analyst Eric Balchunas also mentioned that he has heard some rumors that the Litecoin S-1 document has received feedback from the SEC, and the revised document is a good sign for predicting that Litecoin is most likely to become the next approved cryptocurrency (ETF).
Three Altcoin ETFs May Attract $14.6 Billion in Capital Inflows
On January 17, Bloomberg ETF analyst James Seyffart tweeted that the SEC has not yet processed the recent Solana ETF application but believes that the approval of Solana or XRP ETFs is just a matter of time.
As early as December 18, Bloomberg analyst Eric Balchunas stated, "We expect a wave of cryptocurrency ETFs in 2025, although they will not be launched all at once. The first may be a Bitcoin + Ethereum combination ETF, followed by Litecoin (because it is a fork of Bitcoin = commodity), then HBAR (because it has not been classified as a security), and finally XRP/Solana (both of which have been classified as securities in pending lawsuits)."
Last year, the SEC received multiple applications for ETFs tracking cryptocurrencies other than Bitcoin, from XRP to Solana and Litecoin, but ultimately only approved Ethereum-related ETFs. With the pro-crypto Trump administration set to take office next week, according to analyses by Bloomberg ETF analysts Eric Balchunas and James Seyffart, Litecoin (LTC) may be the first cryptocurrency to receive approval.
JPMorgan analysts expect that if multiple altcoin ETFs are approved by the SEC, they could attract up to $14 billion in capital inflows. According to JPMorgan's analysis, the Solana ETF is expected to attract $3 billion to $6 billion in funding within 6 to 12 months, while the XRP ETF could attract $4 billion to $8 billion. This prediction is based on the "adoption rate" data of existing cryptocurrency ETFs. For example, the Bitcoin ETF attracted approximately $108 billion in assets one year after its launch, with a penetration rate of 6% of Bitcoin's market cap. Similarly, the Ethereum ETF attracted $12 billion in assets within six months, with a penetration rate of 3% of Ethereum's market cap.
In the cases of Solana and XRP, JPMorgan analysts expect that at a 3% penetration rate, Solana could attract $2.7 billion in funding, while XRP could attract $430 million. At a 6% penetration rate, Solana's inflow could reach $5.2 billion, while XRP could reach $8.4 billion.
For Litecoin, if estimated in this manner, if it can be accepted by Wall Street at the same speed as Bitcoin, investor demand for the product could soar to $580 million, based on a 6% penetration rate for the Bitcoin ETF.
Numerous Crypto ETF Applications Are on the Way, Grayscale Solana ETF to Receive Preliminary Response on January 23
As of mid-December 2024, the list of crypto ETF applications includes two recently approved applications. ("N/A" indicates that the proposed listing exchange has not submitted a 19b-4 form.) Source: Bloomberg, CF Benchmarks
On December 19 last year, the SEC officially approved the first batch of "Bitcoin + Ethereum" mixed exchange-traded funds (ETFs), namely the Hashdex Nasdaq Crypto Index US ETF (Nasdaq) and the Franklin Crypto Index ETF (Cboe BZX), which are expected to be officially listed for trading in January 2025. These moves lay the groundwork for new ETF approvals following the approval of Bitcoin and Ethereum spot ETFs.
As of mid-December 2024, several altcoin ETF applications are awaiting SEC approval. Among them, Grayscale's Solana ETF is expected to receive a preliminary response from the SEC by January 23, while other Solana ETF applications are due by January 25. Meanwhile, Ripple's XRP ETF application is also under review, with multiple companies including WisdomTree, Bitwise, 21Shares, and Canary Capital having submitted applications.
In a horizontal comparison of the three altcoin ETFs, Katalin Tischhauser, head of investment research at crypto bank Sygnum, pointed out that the likelihood of Solana becoming the third cryptocurrency (after Bitcoin and Ethereum) to receive approval for a U.S. spot ETF by the end of January is low. She stated that the SEC has not yet begun evaluating the market for Solana as an underlying asset, which means that the approval of Solana's ETF may take more time.
With the Trump administration set to take office in four days, the market is filled with anticipation for the approval prospects of cryptocurrency ETFs. On January 17, according to foreign media reports, U.S. President-elect Trump expressed a willingness to establish a U.S.-first strategic reserve, prioritizing cryptocurrencies like Solana (SOL) and XRP, which has boosted overall market sentiment.
Currently, the ETF applications for LTC, Solana, and XRP may find more opportunities in the new policy environment. With the appointment of new SEC Chairman Paul Atkins, a reversal of the previous SEC's regulatory and approval model is expected, and the approval of altcoin ETFs is likely to become an important topic in the crypto market in the coming months, making the development of this process worthy of close attention.
