Why Litecoin Could Be the Next Cryptocurrency to Get ETF Approval

Author: Tom Carreras, CoinDesk; Compiler: Deng Tong, Golden Finance

Summary

• The SEC may be working on a Litecoin ETF application, Bloomberg ETF analysts say.

• If so, they predict Litecoin is the cryptocurrency most likely to get its own ETF.

• However, the incoming leadership of the SEC may change that.

With just four days left until the inauguration of U.S. President-elect Donald Trump, and the U.S. Securities and Exchange Commission (SEC) set to usher in new leadership, more cryptocurrencies may soon join the ranks of Bitcoin (BTC) and Ethereum (ETH) and get their own spot exchange-traded funds (ETFs).

Eric Balchunas and James Seyffart, two ETF analysts at Bloomberg Intelligence, said that Litecoin (LTC) is likely to be the first to be approved.

"Canary Funds just filed an amended S-1 for its Litecoin ETF application. While not guaranteed, this may indicate that the SEC is involved in the application," Seyffart posted on X.

“We have heard that the Litecoin S-1 filing has received a response from the SEC,” Balchunas wrote, adding that the revised filing “foreshadows our prediction that Litecoin is the most likely to be the next cryptocurrency approved.”

In addition, the Nasdaq Stock Exchange filed a Form 19b-4 for Canary Funds’ Litecoin ETF on Thursday, meaning the SEC will now be forced to approve or reject the ETF within the next year.LTC is up 18% in the past 24 hours.

Why Litecoin? With a market cap of $8.8 billion, Litecoin is the 11th largest cryptocurrency in the CoinDesk 20 (an index of the top 20 cryptocurrencies excluding stablecoins, meme coins and exchange coins) and 24th overall.

But Litecoin is a fork of Bitcoin, which means its protocol follows the same basic rules as Bitcoin; for example, it uses a proof-of-work consensus mechanism. Importantly, and in contrast to larger cryptocurrencies like Solana (SOL) and Ripple (XRP), the SEC has never called Litecoin a security.

“We expect to see a wave of cryptocurrency ETFs next year, although not all at once,” Balchunas wrote in December. “First will likely be a combined Bitcoin and Ethereum ETF, then possibly Litecoin (since it’s a fork of Bitcoin = commodity), then HBAR (since it’s not labeled a security), then XRP/Solana (which is labeled a security due to pending litigation).”

However, the SEC under Paul Atkins may treat the crypto industry differently than it did under Gary Gensler, which Balchunas noted is a “huge wild card.”