The U.S. Securities and Exchange Commission (SEC) has failed to issue a decision by the expected deadline on Canary Capital’s spot Litecoin ETF.
The SEC cites the ongoing federal government shutdown as a key factor.
Deadline Missed and Silence from the SEC
On Thursday, everyone was waiting to see what the SEC would say regarding the approval of Canary’s proposed Litecoin ETF.
The agency remained noncommittal, taking neither steps to advance the filing nor to deny it.
This has left the ETF issuer and prospective investors in a state of no little perplexity.
Sources claim that the absence of any response does reflect some closure.
They also say that it is the consequences of the shutdown that account for the legal absence.
Over the weekend, the imposed absence on filing any new registrations and the review of older ones was made clear.
Back in August, the SEC itself stated the absence of federal funding meant it would be reducing the scope of application reviews and approvals.
A Shift in Regulation
The delay comes as the SEC is undergoing significant changes in how it processes crypto-asset ETF proposals.
In the past, many of these applications were submitted under Section 19b-4, which had set deadlines.
However, in recent weeks, the SEC has requested that issuers, including Canary, pull their 19b-4 filings and instead use the newer generic listing standard outlined in Rule 6c-11.
This places a greater emphasis on S-1 registration statements.
Reports indicate that Canary Capital withdrew its 19b-4 application on September 25 at the SEC’s request.
With this shift, some analysts think that the usual deadlines tied to 19b-4 filings might not be relevant anymore, making it even harder to predict when a final decision will be made.
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Market Impact
Litecoin (LTC) demonstrates the balance most cryptocurrencies are able to sustain during seasons of uncertainty within the market.
This latest range of postponements is seen as temporary rather than a complete rejection.
The postponement is justified as a result of the SEC’s limited functioning during the period.
Nonetheless, this postponement certainly raises questions about the timing of the delayed proposals for other coins, especially Solana, XRP, Dogecoin, and Cardano.
There is a presumption of a cascade effect whereby a single delay in a prominent case may result in a blanket delay in other proposals.
The relaxed generic listing guidelines will not be able to provide much relief as the system still expects prolonged review times.
The staff of the SEC, responsible for approvals, is still operating with limited personnel, which raises the question of whether the proposed rules will be of any help immediately.
What Comes Next?
Currently, the main focus is how long the government shutdown will last.
After the government funds the SEC, they will be fully operational again and tackle the backlog of reviews.
For now, the timetable for the Canary Litecoin ETF will be flexible.
Investors and issuers will likely be attentive to SEC communications, changes to the S-1 filings, and the ongoing conversation regarding the potential relaxation of the proposed rule deadlines.
