Litecoin is heading towards the next ETF, and applications for altcoin ETFs may speed up due to the Trump administration coming to power.

Author: Weilin, PANews

On January 17, Nasdaq submitted Form 19b-4 for Canary Funds’ Litecoin Spot ETF, which marked that the application officially entered the 240-day review period. During this process, the Securities and Exchange Commission (SEC) will have the authority to approve, deny or request additional information. At the same time, Bloomberg analyst James Seyffart revealed that Canary Funds ’ application for a Litecoin ETF has submitted a revised S-1 document, suggesting that the SEC may have begun to participate in the review. In the two-step approval process required for ETFs, the Litecoin ETF has ushered in new developments.

With the Trump administration about to take office, the market is full of expectations for the future regulatory direction of altcoin ETFs, especially regarding the approval of altcoin ETFs such as Litecoin, Solana , and XRP.

Nasdaq files Form 19b-4 for Canary’s Litecoin ETF

On January 17, Nasdaq filed Form 19b-4 for Canary Funds’ Litecoin ETF application. The document shows that US Bancorp Fund Services, LLC will serve as the administrator, and US Bank NA will be responsible for custody of the ETF’s cash. According to the filing, Coinbase Custody Trust Company LLC will host the ETF’s Litecoin.

According to SEC regulations, upon submission of this form, a 240-day approval cycle will be initiated. During this period, the SEC will decide whether to approve the application or request further information. "This 19b-4 filing from Nasdaq drives the process within the SEC, but the SEC still needs to confirm the filing, which usually happens within a few weeks," said James Seyffart, ETF analyst at Bloomberg. "If or when the SEC confirms this filing, we will have a clearer picture of the timeline for potential denials or approvals."

"Bit gold, Lite silver", this is a slogan in the ancient currency circle. 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. Initially, Litecoin was created by Charlie Lee in 2011 and was mainly aimed at small transactions. Although its core developers participated, there was relatively little direct intervention, which also made its "decentralized" feature more prominent. It is worth noting that the SEC has never regarded Litecoin as a security. This is different from cryptocurrencies with larger market capitalizations such as SOL and XRP, which are called "securities" by the SEC, which means that LTC has certain convenience in approval.

As of 2 pm on January 17, Litecoin's market value was US$10.48 billion. According to CMC data, it currently ranks 19th in market value among cryptocurrencies, and its price has increased by 16% in the past 24 hours. This growing trend makes Litecoin ETF approval more attractive, especially since the SEC has not deemed Litecoin a security.

Form 19b-4 is the second part of the two-step process for ETF approval and follows Canary Capital’s filing of a revised Form S-1 on Wednesday. On January 16, Canary Funds submitted a revised S-1 document for its Litecoin ETF application. Analyst James Seyffart said that while there is no guarantee, it may indicate that the SEC has some involvement in this filing, and this development is a positive sign for predicting that the Litecoin ETF is more likely to be approved.

Bloomberg analyst Eric Balchunas also said that after hearing some rumors, Litecoin’s S-1 document has received feedback from the SEC. The revised document is helpful to our prediction that Litecoin is most likely to become the next approved cryptocurrency ( ETF) is a good sign.

3 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 accepted the recent Solana ETF application, but believes that the approval of Solana or XRP ETF is only a matter of time.

As early as December 18, Bloomberg analyst Eric Balchunas said, “ We expect to see a wave of cryptocurrency ETFs in 2025, although they will not be launched at once. The first may be a Bitcoin + Ethereum combination ETF, and the second may be It’s Litecoin (because it’s a fork of Bitcoin = a commodity), then HBAR (because it’s not classified as a security), and finally XRP/Solana (both of which have been classified as securities in pending litigation ).”

Last year, the SEC received multiple applications for ETFs tracking cryptocurrencies other than Bitcoin, from XRP to Solana and Litecoin, but ultimately only approved ETFs related to Ethereum. With the pro-crypto Trump administration set to take office next week, Litecoin (LTC) may be the first cryptocurrency to gain approval, according to analysis by two Bloomberg ETF analysts Eric Balchunas and James Seyffart.

JPMorgan analysts predict that if multiple altcoin ETFs receive SEC approval, they could attract as much as $14 billion in inflows. According to analysis by JPMorgan Chase, the Solana ETF is expected to attract $3 billion to $6 billion in funds within 6 to 12 months, while the XRP ETF may attract $4 billion to $8 billion. This prediction is based on “adoption” data for existing cryptocurrency ETFs. For example, the Bitcoin ETF has attracted approximately $108 billion in assets one year after its launch, with a penetration rate of 6% of Bitcoin’s market capitalization. Similarly, the Ethereum ETF attracted $12 billion in assets in six months, with a penetration rate of 3% of Ethereum’s market capitalization.

In the case of Solana and XRP, JP Morgan analysts predict that at a penetration rate of 3%, Solana may attract $2.7 billion in funds and XRP may attract $430 million in funds. At a penetration rate of 6%, Solana’s inflows may reach $5.2 billion, and XRP’s inflows may reach $8.4 billion.

For Litecoin, if it were accepted by Wall Street at the same rate as Bitcoin, investor demand for the product could surge to $580 million, based on 6% penetration of Bitcoin ETFs Rate.

Many crypto ETF applications are on the way, and Grayscale Solana ETF

received a preliminary reply on January 23

List of crypto ETF applications as of mid-December 2024, including two recently approved applications. (“N/A” indicates that the proposed listing exchange has not filed Form 19b-4.) Source: Bloomberg, CF Benchmarks

On December 19 last year, the SEC officially approved the first batch of "Bitcoin + Ethereum" hybrid exchange-traded funds (ETFs), namely Hashdex Nasdaq Crypto Index US ETF (Nasdaq Exchange) and Franklin Crypto Index ETF ( Cboe BZX Exchange), is expected to be officially listed for trading in January 2025. These moves lay the foundation for the approval of new ETFs following the approval of Bitcoin and Ethereum spot ETFs.

As of mid-December 2024, multiple altcoin ETF applications are awaiting SEC approval. Among them, Grayscale’s Solana ETF is expected to receive a preliminary response from the SEC before January 23, and applications for other Solana ETFs are due on January 25. At the same time, Ripple’s XRP ETF application is also under review, and multiple companies including WisdomTree, Bitwise, 21Shares and Canary Capital have submitted applications.

Comparing the three altcoin ETFs horizontally, Katalin Tischhauser, director of investment research at crypto bank Sygnum, pointed out that Solana is unlikely to become the third crypto asset to be approved for US spot ETFs at the end of January (after Bitcoin and Ethereum). She said the SEC has not yet begun evaluating the market for Solana as the underlying asset, meaning Solana’s ETF approval could take more time.

With the Trump administration taking office in four days, the market is full of expectations for the prospect of cryptocurrency ETF approval. On January 17, according to foreign media reports, U.S. President-elect Trump expressed his willingness to establish a U.S.-first strategic reserve and give priority to cryptocurrencies such as Solana (SOL) and XRP. This good news also boosted the overall market situation. .

At present, ETF applications for altcoins such as LTC, Solana and XRP may usher in more opportunities in the new policy environment. Due to the appointment of new SEC Chairman Paul Atkins, it is expected to reverse the past SEC supervision and approval model. It is expected that the approval of altcoin ETFs will become an important topic in the crypto market in the next few months. The development of this process deserves close attention.