Will SEC Missing Litecoin ETF Deadline Affect XRP and Solana ETFs?

By
Kritika Mehta
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Will XRP, Solana ETFs Be Affected as SEC Misses Canary Litecoin ETF Deadline

Key Highlights:

  • The SEC missed a key deadline for Canary Capital’s Litecoin ETF on October 2.
  • The delay is attributed to the U.S. government shutdown; however, the recent change in lighting standards could also have played a role.
  • Now, the crypto market is pondering if the LTC ETF delay would affect crypto ETF filings, involving Solana, XRP, Cardano, and others.

The U.S. Securities and Exchange Commission (SEC) missed the deadline of October 2 concerning the ruling of the Canary Capital Litecoin exchange-traded fund (ETF), leaving the crypto industry in the air on what the regulator would do next. The delay is the reason why the government functions are still curtailed during the federal shutdown, which raises a question of when other crypto ETF submissions, such as Solana (SOL), Ripple’s XRP, Dogecoin (DOGE), Cardano (ADA), and Hedera (HBAR) will be affected too.

The outcome of the Litecoin product filing, under the Securities Exchange Act of 1933, was anticipated to be the first altcoin ETF, and it was one of the outcomes that industry watchers were keen on as a possible landmark. Rather, the silence of the SEC has caused unease among issuers and investors because the agency cannot carry out normal business due to limited staff members.

Potential After-Effects on XRP, Solana and Other Crypto ETFs

Fox Business reporter Eleanor Terrett noted that the disruption “could affect the $LTC ETF approval because the SEC still needs to sign off on the S-1 and the agency is operating on a skeleton crew.” Terrett added that with staffing reduced, “it’s unclear what remaining staff is working/what their priorities are at the moment.”

According to NovaDius Wealth Management President Nate Geraci, the deadline miss could delay the decision for Solana, XRP, Dogecoin, and other crypto ETF applications. However, he previously expressed confidence in an imminent approval.

“The regulator can approve any or all of these whenever,” he said at the time. The ultimate decision of the SEC regarding Solana ETFs is due on October 10, and the outcomes of XRP and Dogecoin funds are likely to be received during the same period.

Bloomberg Analysts Weigh In

James Seyffart of Bloomberg wrote that the SEC has been pushing issuers towards the generic listing structure. “Which means this deadline date might not matter at all,” he said, and what the regulator would prefer to see is a re-filing under the new process by issuers. S-1 registration statements are still valid, but all of the 19b-4s have been requested to be withdrawn by the SEC.

Seyffart confessed that he was “uncertain about what’s happening at this exact moment” because the shutdown blurs the fate of the pending reviews. Previously, Bloomberg’s Eric Balchunas and Seyffart estimated a 90-95% likelihood of approvals on most of the altcoin ETF submissions, but the current freeze of regulatory operations has compelled issuers to shelve plans.

SEC’s Operations Plan and Crypto Market Implications

In August, the SEC explained its contingency plan in the event of a funding lapse. That document said that the agency would “not review and approve applications for registration” during a shutdown. With that plan in place, essential departments like Corporation Finance, Trading and Markets, and Investment Management could not do any paperwork until funding was resumed.

The suspension puts at risk more than 90 applications of ETFs awaiting approval, including those of multi-asset funds and separate funds for tokens such as XRP, Solana and Litecoin.

The pause also spoils the anticipation of the “ETF Cryptober” as analysts created the term to describe the crowded calendar of ETF decisions that were to be made in the month. Sixteen crypto-related products were supposed to proceed in October but the government intervention came in the form of the government shutdown.

Community Reaction

On social media, the Litecoin team reacted to the absence of updates by sharing a funny GIF, which highlighted the confusion of the community as they waited for the agency’s decision. In the meantime, Terrett reported that an SEC spokesperson revealed that “because of the shutdown, they are not able to respond to many press inquiries.”

The crypto market is playing the waiting game on when the regulator will start reviewing the applications. The industry is also wondering whether altcoin ETFs, such as Solana and XRP, will get the same treatment as Litecoin with delays.

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