Litecoin(LTC)sawabriefsurge,followinganofficialfilingbyCanaryCapital,aninvestmentfirmwithafocusoncrypto,foraspotLitecoinETF.
ThisfilingmarkedthefirstattempttogetregulatoryapprovalforanETFtieddirectlytothespotpricesofLTC,whichcurrentlyranksasthe27thlargestcryptocurrencybymarketcapitalization.
TheLitecoinETF’sunderlyingtrustwillexclusivelyholdLTC,aimingtomirrorLitecoin’spricewhileaccountingforoperationalexpenses.Forsecurity,mostoftheLTCwillbestoredinofflinecoldstoragetominimizehackingrisks,withthecustodianmanagingbothcoldandhotwalletsystems.Asmallamountofassetswillremaininhotwalletsforquicktransactions.
SharesintheETFwillbeissuedandredeemedinbulkbyAuthorizedParticipants,typicallybroker-dealers.TheseparticipantswillexchangecashfornewlyissuedsharesoftheETFandreceivecashbackwhensharesareredeemed.
AlthoughAuthorizedParticipantswon’tdirectlyhandleLitecoin,theirinvolvementinsharecreationandredemptioncouldaffecttheLTCmarket,potentiallycausingpriceshiftsduetoarbitragebetweentheETF’ssharevalueandLitecoin’smarketprice.
CanaryCapital’srecentETFproposalforLitecoincameshortlyafteritsearlierfilingthismonthforanXRPETF.BothLitecoinandXRParealsoofferedthroughGrayscale’strusts—theGrayscaleLitecoinTrust(LTCN)andthenewlylaunchedGrayscaleXRPTrust(XRX).
TheLitecoinTrust,launchedin2018,allowsinvestorstogainpriceexposuretoLTCwithoutthehassleofdirectcryptoownership,whiletheXRPTrustbeganjustlastmonth.
TheseETFapplicationscomeamidgrowinginterestincryptoinvestments,spurredbytherecentintroductionofspotBitcoinandEthereumETFsintheU.S.Ifapproved,theproposedETFscouldboostliquidityandstabilizethepricesofthesecryptoassets.However,regulatoryapprovalremainsuncertain,astheSECcontinuestoviewmostcryptocurrencies,apartfromBitcoinandEthereum,assecurities.
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