SEC Recognizes Nasdaq’s Proposal for the Canary Litecoin ETF, Initiating Regulatory Review

This step initiates a 21-day public comment period where investors and industry participants can weigh in before the agency makes its decision.

Nasdaq’s proposal for the Canary Litecoin ETF has been recognized by the U.S. Securities and Exchange Commission (SEC), kicking off the regulatory review process.

This acknowledgment follows the SEC's recent approval of the world's first Bitcoin futures ETF, setting the stage for a potential approval of the first altcoin ETF in the coming months. The SEC will now open a 21-day public comment period, inviting investors and industry participants to submit their feedback on the ETF proposal before the agency makes its final decision.

Nasdaq filed the application for the Canary Litecoin ETF with the SEC back in December 2021, seeking to launch an exchange-traded fund that will track the performance of Litecoin. The ETF, if approved, will trade on the Nasdaq Stock Market under the ticker "LITC." According to the filing, the fund will invest in Litecoin through cash-settled futures contracts.

This step marks a significant development in the regulatory pipeline for cryptocurrency ETFs, with the SEC handling several applications for both Bitcoin and altcoin ETFs. As reported by Bloomberg, seven crypto ETF applications are currently under review by the SEC, including proposals for Solana and Dogecoin ETFs.

Bloomberg analyst Eric Balchunas highlighted that this is the most advanced altcoin ETF application to date, with the SEC reviewing both the 19b-4 and S-1 filings for the Canary Litecoin ETF. The agency will assess market risks, investor protections, and compliance requirements before reaching a verdict. Moreover, analysts will keep an eye on whether the SEC utilizes the full 240-day review period or acts earlier, particularly with shifting leadership within the agency.

The growing interest from asset managers in launching crypto ETFs indicates their anticipation of more regulatory approvals. Grayscale, the world's largest digital currency asset manager, is seeking to convert its Litecoin Trust into an ETF. At the same time, CoinShares, a European digital asset management firm, has submitted a separate application to launch a Litecoin ETF.

Beyond Litecoin, Cboe is working to list Solana ETFs from firms like VanEck and Bitwise, and Bitwise has also applied for a Dogecoin ETF. This wave of filings signals confidence that regulators may be warming up to more crypto-based investment products.

The outcome of the SEC’s review will set an important precedent for future altcoin ETFs. A green light for Litecoin could encourage more filings for other digital assets, expanding investor access to cryptocurrency exposure through traditional financial markets.