The SEC Delayed Canary Capital's Application for a Litecoin ETF Today

The price of LTC fell 5% after the announcement. The public comment aspect doesn't appear to signal the Commission's intentions; this could be a standard delaying tactic.

The U.S. Securities and Exchange Commission (SEC) has decided to delay an application for a Litecoin (LTC) ETF, sparking a downturn in the cryptocurrency's price.

This application was submitted by crypto asset management firm Canary Capital LLC in December 2023, and the SEC's decision was due today, August 18.

Instead of making a swift decision, the Commission has opted to open public comment on this application. It is also specifically requesting that commenters address the proposal's compliance with regulatory requirements.

"The Commission solicits and encourages interested persons to provide comments on the proposed rule change. The Commission asks that commenters address the sufficiency of the proposal, among other issues, to designed to prevent fraudulent and manipulative acts and practices, or raises any new or novel concerns not previously contemplated by the Commission," the SEC stated in its notice.

To be clear, this request for public comment isn't necessarily positive or negative. The SEC is currently considering a large number of altcoin ETF proposals, several of which have recently been subject to delay.

In fact, the Commission opened public comment on a separate application for a Litecoin ETF, submitted by Bitwise, back in February.

This aspect isn't surprising, but it has nevertheless led to a bearish reaction in the market.

Will The SEC Reject A Litecoin ETF?

A few months ago, analysts claimed that a Litecoin ETF was more likely to get approved than any other altcoin ETF. Its Polymarket odds briefly reached 85% in February.

Moreover, today's SEC deadline had led to anticipation within the cryptocurrency community. However, the market reacted negatively to this development.

Litecoin's price dropped quickly following the announcement, falling 5% at its lowest point. Polymarket's odds for a Litecoin ETF approval in Q2 2025 also plummeted, although the chances of a 2025 approval in general remained relatively stable.

The most bullish expectations had listed Q2 as a potential time frame for altcoin ETF approvals, and this bet now seems rather unlikely.

In other words, things could be a lot worse.

James Seyffart, an ETF analyst who had predicted the Litecoin delay, didn't comment on the public comment aspect. It appears like a stretch to claim that the SEC is signaling its intent to refuse this or any other altcoin ETF proposal with this move.

Still, traders are repositioning their bets on the altcoin as a result of this development.