The CTFC has labeled Litecoin (LTC) as a commodity, and now investors are asking ‘is a Spot Litecoin ETF imminent?’, but how real is the prospect of an LTC ETF?
IntoTheBlock data shared by Jay Milla, the Litecoin Foundation Director of Marketing, on March 26 now shows that there are over 8 million Litecoin holders. This news comes alongside speculation of a potential spot Litecoin exchange-traded fund (ETF).
News of Litecoin recording more holders and rumors of a possible spot LTC ETF in the United States also coincides with a bullish development that could accelerate adoption among institutional players.
CFTC Classifies Litecoin (LTC) As A Commodity
On March 26, the United States Commodity Futures Trading Commission (CFTC) filed a complaint against KuCoin, a leading cryptocurrency exchange, which, among other things, allowed the trading of Litecoin.
In the lawsuit, the regulator said Litecoin is a commodity. This clarity is a massive endorsement of LTC. It has fueled rumors that the United States Securities and Exchange Commission (SEC) is more likely to approve a spot LTC ETF if filed.
Currently, BlackRock and Fidelity have filed for a spot Ethereum ETF with the SEC. However, there are talks of the Commission pushing to classify ETH as a security; denting hopes of a spot Ethereum ETF ever seeing the light of day.
The second-most valuable cryptocurrency continues to face murkier regulatory waters. Though the CFTC thinks ETH, like Litecoin and Bitcoin, is a commodity, the SEC has been slow on clarifying its status despite talks of a spot Ethereum ETF approval gaining momentum.
The fact that the CFTC has classified LTC as a commodity makes the coin more appealing, elevating its probability of the SEC approving a spot LTC ETF once filed. Unlike Ethereum, which uses a proof-of-stake consensus algorithm, Litecoin and Bitcoin use a proof-of-work system.
Are Institutions Keen On A Spot LTC ETF?
Moreover, there are rumors of growing institutional interest in a spot Litecoin ETF. In a post on X, journalist Eleanor Terrett said there are talks of institutions choosing Litecoin over Ethereum and are keen on a spot LTC ETF.
In their assessment, they say Litecoin shares functional similarities with Bitcoin. Accordingly, if filed, the SEC might be more receptive and even approve a spot LTC ETF.
This news also comes as Coinbase Derivatives announced plans to launch futures contracts for, among others, LTC and Dogecoin. The exchange plans to diversify its offerings by offering CFTC-compliant derivative products.
In the aftermath of the flurry of news, LTC is trading above $96, up +6% in the last trading day and +22% in the previous week – as holders target a return above $100.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
Read More: CFTC labels Litecoin As a commodity, Prospects of spot LTC ETF?