Canary Capital Group, a fledging crypto investment firm that recently launched in the US, has filed an S-1 registration with the US Securities and Exchange Commission (SEC) for a spot Litecoin exchange-traded funds.
According to this, the Canary groups, the same one associated with the XRP ETF are gearing up for a new Exchange Traded Fund. This time they are front-running Litecoin for it. With Litecoin employing a Proof of Work (PoW), there is a high chance of it getting approved.
What is Litecoin (LTC)?
Litecoin is a cryptocurrency derived from the Bitcoin blockchain. Formed in 2011, it was created by one of the former Google Engineers. It is a decentralized peer-to-peer cryptocurrency and open-source software inspired by Bitcoin. Litecoin is one of the most prominent crypto coins in the market nowadays.
Designed to overcome several drawbacks of Bitcoin, Litecoin also employs a faster block generation time and larger maximum supply. As a lot of people adopted Litecoin for various transactions and also with the backing of a vibrant and strong community, Litecoin has slowly become one of the top contenders in the crypto market.
How Does the Litecoin ETF Work?
In this scheme, the ETF purchases Litecoin from various exchanges or through direct peer-to-peer transactions with other investors. After the coins are purchased, they are stored by a third party to ensure their security. This third party can either be a person or an organization. They are responsible for safeguarding the asset from any external threats.
The ETF allows people to invest in it rather than committing to crypto trade directly. By doing this, the risk is somewhat mitigated to some extent. However, the main highlight of this is that it provides an opportunity for mainstream traders to immerse themselves in crypto trading.
Canary Capital Gearing up for a Litecoin ETF
During the previous week, the Canary Capital Group filed an S-1 registration for a spot XRP ETF. And, just after a week, an application for a spot LTC has already been submitted by the same. But more is needed to get approval, they also have to file a19b-4, which is crucial for issuing spot cryptocurrency ETFs.
Instead of employing a third party to safeguard the asset, the Canary groups are going to hold the coins directly, with its Net Asset Value (NAV) being determined based on the CoinDesk Litecoin Price Index. On a further note, just after this announcement was made public, the price of the coin shot up. Now, the coin is trading at $70.84 with a weekly increase rate of 9.81%.
Is The Canary Capital Reliable?
Canary Capital is a relative newcomer to the world of ETFs, so the company may face several challenges in the coming days. The firm’s future in the ETF space depends on how it overcomes these hurdles. The filing on October 8 was the company’s first step in immersing itself in the ETF space, so it does not have any track record of managing large-scale digital assets.
This can be considered a major drawback by many investors in the market. Having an extensive track record could have boosted the company’s name and popularity. But, even with all these disadvantages, Litecoin’s regulatory status may turn in favor of the firm. Based on all of these, we can’t 100% guarantee that the Canary Capital is a reliable company.
Will the US SEC Approve the Litecoin ETF?
It is still not certain whether the SEC will approve the Litecoin ETF or not. Even though the SEC has recently allowed many cryptocurrency ETFs, we can’t take out the possibility that the Canary Capital will be rejected.
For the approval to be given, the Canary firm needs to prove that it can successfully safeguard the assets and prevent any misconduct that might occur in the possible future. As Litecoin is using the Proof-of-work mechanism to verify transactions, the SEC might deem it safe and may consent to the approval.
Conclusion
The move made by the Canary Capitals to file for a Litecoin ETF is an exciting development in the crypto world. This exchange might lead to the opening of a new door in the crypto world, which allows mainstream traders to interact and trade with various crypto assets.
However, getting the approval of the SEC remains a major challenge. Canary’s lack of experience may prove to be fatal for them. But the fact that Litecoin is a well-established coin may work in their favor. As of now, we can only wait and see what might unfold in the future.
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