Canary Capital's proposed spot Litecoin ETF is in a state of limbo after the SEC took no action on the application's original deadline. This silence has raised significant questions for the crypto community, primarily due to two concurrent issues: a federal government shutdown and the SEC's new generic listing standards for crypto exchange-traded products (ETPs).
The Double Whammy: Shutdown and New Rules
- Government Shutdown Impact: The SEC's own August "Operation Plan" stated it would "not review and approve applications for registration" during a shutdown, which includes new financial products and registration statements. While the SEC is operating with a limited staff and its EDGAR filing system is still running, this limited capacity makes action on new filings unlikely.
- New Listing Standards: The SEC has been asking applicants to withdraw their 19b-4 rule change applications and rely solely on the S-1 registration statement for approval. This shift, brought on by the new generic listing standards, potentially renders the traditional 19b-4 deadlines irrelevant. Canary Capital complicated its own case by withdrawing its 19b-4 last week.
The market is left uncertain whether the SEC's inaction on the Litecoin ETF is a result of the government shutdown halting reviews, or if the original 19b-4 deadline was simply moot due to the new regulatory framework.
The Path Forward for Crypto ETFs
Despite the immediate setback, analysts remain optimistic about the broader market for spot crypto ETFs.
- Streamlined Approvals: The new generic listing standards are expected to streamline the approval process under Rule 6c-11, potentially significantly reducing timelines for new products. This has led some analysts to raise the odds of various spot crypto ETF approvals to 100%.
- Growing Market: Any approval—including those pending for Litecoin (LTC), Solana (SOL), XRP, Cardano (ADA), and others—would expand the already significant US spot crypto ETF market, which has seen $61.3 billion in inflows for Bitcoin (BTC) and $13.4 billion for Ether (ETH) ETFs since their launch.
Ultimately, while the government shutdown creates an immediate roadblock for approvals, the regulatory groundwork laid by the new generic listing standards suggests a faster, clearer path for altcoin ETFs once the SEC is fully operational again.
October 2025, Cryptoniteuae