Market rally sparked as SEC prepares for leadership change amid Canary Capital’s filing for Litecoin ETF

Canary Capital’s Litecoin ETF filing adds another contender to the race, but will new SEC leadership give LTC an edge over Solana and XRP?

Table of Contents

Litecoin joins the ETF race
Solana and XRP lead the way
Gensler out, Atkins in: What this means for crypto ETFs

Litecoin joins the ETF race

The competition for cryptocurrency ETFs in the United States may have a new participant, this time being Litecoin (LTC).

On January 16, Canary Capital, a firm specializing in digital assets and crypto fund management, submitted an amended S-1 form for a proposed Litecoin exchange-traded fund. Bloomberg ETF analyst James Seyffart shared this update on X.

An amended S-1 filing indicates that the issuer is actively addressing regulatory concerns, often incorporating feedback from the Securities and Exchange Commission. While this doesn’t guarantee approval, it suggests ongoing dialogues with regulators.

However, the crucial 19b-4 filing is still pending, meaning the official timeline for SEC approval or denial has not yet commenced.

“Bloomberg ETF analyst Eric Balchunas expressed optimism, stating, “This development aligns with our prediction that Litecoin is the most probable next coin to be approved.” Nevertheless, he acknowledged the significant uncertainty posed by the impending leadership changes at the SEC.”

For context, ETFs enable investors to access assets such as cryptocurrencies without direct ownership. If approved, Litecoin’s ETF could become the third crypto ETF in the U.S., following Bitcoin (BTC) and Ethereum (ETH).

Market trends seem to reflect these murmurs. As of January 16, LTC’s price surged over 16% in the past 24 hours, reaching $117.92, positioning it as the fourth-largest gainer among the top 100 cryptocurrencies by market cap.

According to on-chain analytics firm Santiment, this upsurge is fueled by “whales” – large investors holding a minimum of 10,000 LTC – who have acquired 250,000 coins since January 9.

Santiment also observed that “Litecoin has decoupled from other altcoins,” suggesting that the momentum might be more than transient.

Solana and XRP lead the way

The competition for crypto ETFs in the U.S. intensifies, with Solana (SOL) appearing to be further along in the process compared to Litecoin.

Notably, five prominent firms – VanEck, Grayscale, 21Shares, Bitwise, and Canary Capital – submitted 19b-4 forms for spot Solana ETFs as early as November, advancing these applications to formal SEC review. This places Solana ahead of Litecoin in the approval timeline.

Deadlines for these applications are swiftly approaching. Grayscale’s Solana ETF holds the forefront, with a response expected by January 23.

The remaining four issuers, including VanEck and Bitwise, anticipate preliminary decisions by January 25, marking 45 days since the SEC initiated the formal review.

Nonetheless, approval is far from assured. The SEC has historically exercised caution with spot crypto ETFs, particularly for assets lacking a robust, regulated futures market.

Under Chair Gary Gensler’s tenure, the agency has maintained that spot crypto ETFs will not be sanctioned unless there exists a highly correlated, regulated futures market for the asset.

Bitcoin and Ethereum met this criterion through their futures markets on the Chicago Mercantile Exchange, a framework Solana currently lacks.

Simultaneously, the push for a Ripple (XRP) ETF gains momentum. Four firms – WisdomTree, Bitwise, 21Shares, and Canary Capital – have filed applications, with WisdomTree’s submission requiring an SEC response by January 16.

Projections from banking giant JPMorgan suggest that Solana and XRP ETFs alone could attract up to $14 billion in their initial year. VanEck’s Matthew Sigel shared JPMorgan’s forecasts on X.

Specifically for Solana, estimates indicate an inflow ranging from $3 billion to $6 billion. Conversely, XRP could potentially draw $4 billion to $8 billion.

Balchunas commented on these projections, remarking that while his team has not issued formal predictions, JPMorgan’s estimations appear plausible.

The question remains whether Solana, XRP, or Litecoin will break through the SEC’s obstacles first.

Gensler out, Atkins in: What this means for crypto ETFs

The cryptocurrency sector stands on the brink of significant regulatory changes as the SEC prepares for a complete leadership transition.

On January 20, outgoing SEC Chair Gary Gensler, known for his stringent stance on crypto regulation, will step down.

Gensler’s departure aligns with the inauguration of Donald Trump as the 47th president of the U.S., ushering in a new era for the SEC under the leadership of Paul Atkins, Trump’s chosen chair.

Atkins, a former SEC commissioner, is widely seen as a proponent of cryptocurrencies. His approach is anticipated to diverge significantly from Gensler’s enforcement-focused tenure, during which the SEC initiated over 80 actions against crypto entities, often alleging that certain tokens were unregistered securities.

While Gensler’s proponents argue that these actions were imperative to combat fraud and manipulation, opponents contend that his approach stifled innovation and fostered an atmosphere of regulatory ambiguity.

The incoming leadership appears poised to adopt a more balanced strategy. Atkins is expected to collaborate closely with Republican SEC commissioners Hester Peirce and Mark Uyeda, both vocal critics of Gensler’s policies.

A pivotal shift could involve the SEC’s purported plan to halt or potentially retract enforcement actions unrelated to fraud allegations. If enacted, this move would mark a significant departure from Gensler’s aggressive stance, offering the industry an opportunity to rebuild trust with regulators.

Consequently, the stakes are particularly high for the future of crypto ETFs, a sector that could witness expedited approvals under the new SEC leadership.

With Litecoin, Solana, and XRP ETFs actively seeking regulatory approval, the industry awaits eagerly to discern whether Atkins will pave the way for a more welcoming regulatory environment.