• Canary Capital has filed for a Litecoin ETF with the SEC
• The Litecoin ETF aims to provide investors with easier access to Litecoin’s value through shares, without needing to directly acquire and secure LTC
• The ETF trust will hold Litecoin as its sole asset, securing it primarily in cold storage to minimize risks
Canary Capital has filed for a Litecoin (LTC) exchange-traded fund (ETF) with the Securities and Exchange Commission (SEC). This comes after Canary Capital recently submitted a filing for an XRP ETF.
ETF Would Simplify Investor Access to Litecoin
According to Canary Capital, the ETF would enable investors to avoid the complexities involved with directly acquiring and securing LTC. This typically requires setting up digital wallets, handling private keys, and navigating exchanges. Instead, investors could simply buy shares of the ETF representing LTC’s value.
Trust Would Hold LTC in Cold Storage to Minimize Risks
The trust behind the Litecoin ETF would hold LTC as its sole asset, aiming to track LTC’s value minus operational costs. To ensure security, the trust would primarily rely on cold storage, keeping private keys offline to safeguard against hacking risks.
The custodian would manage both cold and hot wallets. A small portion of the assets would be held in hot wallets to facilitate immediate transactions.
Authorized Participants Would Create and Redeem ETF Share Baskets
Shares of the ETF would be created and redeemed in large baskets exclusively by Authorized Participants, typically broker-dealers. These participants would provide cash to the trust in exchange for newly created shares. In turn, they would receive cash when redeeming shares.
While Authorized Participants would not handle Litecoin directly, their actions in creating and redeeming shares could impact the LTC market. This is due to potential arbitrage opportunities between the ETF’s share price and Litecoin’s market value.
Most Investors Would Trade ETF Shares on Secondary Market
Most investors would trade shares of the Litecoin ETF on the secondary market under a designated ticker, tracking LTC price movements without holding the asset directly. Authorized Participants could create and redeem share baskets through a cash-based process without handling Litecoin.
Filing Comes Amid Growing Institutional Interest in Crypto ETFs
The filing comes at a time of increasing institutional interest in crypto ETFs. Bitcoin ETFs have recently amassed a combined $60 billion in assets under management. Stablecoins have also seen remarkable growth, reaching a $170 billion market cap.
