SEC Further Delays Decision on Canary Capital’s Spot Litecoin ETF

The U.S. Securities and Exchange Commission (SEC) has once again delayed its decision on whether to approve Canary Capital’s proposed spot Litecoin (LTC) exchange-traded fund (ETF), extending the regulatory uncertainty surrounding altcoin-based investment products.

The postponement, announced on May 5, 2025, involves a formal call for public comments as the SEC examines whether the ETF meets the necessary standards to prevent fraud and market manipulation. Interested parties now have until May 26 to submit feedback, with a rebuttal period open until June 9. This move signals the Commission’s continued caution in approving crypto-based financial instruments, especially those not tied to Bitcoin or Ethereum, which have generally received more regulatory traction.

A Familiar Pattern Emerges in Crypto ETF Landscape

Canary Capital’s ETF application was initially filed in October 2024. The firm, founded by former Valkyrie Funds co-founder Steven McClurg, aims to offer investors exposure to Litecoin through a fully regulated investment vehicle. In January 2025, Nasdaq filed a 19b-4 form proposing to list the ETF, marking a significant procedural milestone in its journey toward potential approval.

However, the SEC’s latest delay aligns with a broader trend of regulatory hesitance. Over the past year, the agency has postponed or denied several ETF applications tied to alternative cryptocurrencies, including those for XRP, Hedera, and Dogecoin. According to regulatory experts, the delays stem largely from concerns over market maturity, liquidity, and the risk of price manipulation in the underlying assets.

Despite this cautious stance, some market analysts maintain a positive outlook for Litecoin. James Seyffart, ETF strategist at Bloomberg Intelligence, commented that Litecoin may have one of the higher chances of securing ETF approval among altcoins due to its relatively long-standing presence in the crypto market and its proof-of-work consensus mechanism, which mirrors Bitcoin’s architecture.

Market Reacts Swiftly to Regulatory Uncertainty

The market responded negatively to the SEC’s announcement. Litecoin’s price dropped nearly 8%, trading at around $81.29 shortly after the news broke. This reflects ongoing investor sensitivity to regulatory developments, particularly as ETFs are seen as a gateway for broader institutional adoption.

As the comment and rebuttal periods progress, market participants and regulatory observers will closely monitor developments. For Canary Capital, the outcome could set a precedent for other altcoin-focused ETFs, potentially shaping the trajectory of crypto-based investment products in the U.S.

Whether the SEC will ultimately approve the Litecoin ETF remains to be seen, but the extended timeline underscores the complexities and evolving nature of cryptocurrency regulation in traditional financial markets.