In a recent interview, Litecoin founder Charlie Lee spoke positively about the prospect of a Litecoin-Exchange Traded Fund (ETF), highlighting that its approval is not a question of if, but when.
Lee drew attention to the similarities between Litecoin and Bitcoin, pointing out that Litecoin’s status as a proof-of-work cryptocurrency and its commodity-like nature make it a primary candidate for an ETF approval.
Litecoin-Bitcoin Structural Similarities
Lee’s confidence in the inevitability of a Litecoin ETF stems from the original silver-to-bitcoin’s gold comparison. Like BTC, Litecoin uses a proof-of-work (PoW) consensus mechanism and shares recognised fundamental tenets such as scarcity and decentralisation, thereby making it an appealing investment option for both retail and institutional investors.
While Lee acknowledges that the demand for Litecoin may not match that of Bitcoin initially, he is optimistic about the long-term outlook for Litecoin. Lee believes that as the cryptocurrency market continues to mature, investors will recognise Litecoin’s value proposition and its robust potential for growth.
While the structural similarities between Bitcoin and Litecoin are a cause for optimism for digital silver, the same cannot be said for Ethereum. In fact, Lee expressed reservations about the prospects of an Ethereum ETF.
With Ethereum’s transition from proof-of-work to proof-of-stake (PoS), Lee believes that obtaining regulatory approval for an Ethereum ETF may be challenging. However, he acknowledges the possibility for a hypothetical Ethereum ETF to have more demand due to its broader ecosystem.
Regardless, as the crypto industry advances Lee sees the odds of investors rediscovering Litecoin’s value proposition increasing.
Beyond a Spot LTC ETF; ETH Version Potential Denial
The commodity/security categorisation places proof-of-stake assets such as Ethereum at a disadvantage, as well as other assets which meet the criteria to be deemed securities.
The U.S. Securities and Exchange Commission (SEC) has tagged Ethereum as a security, while the Commodities Futures Trading Commission (CFTC) has referred to the asset as a commodity as late as 2023. This has caused no small amount of controversy.
In a 2023 Twitter post, Crypto sleuth TruthLabs indicated that a significant portion of funding for the Ethereum project initially came from Wanxiang Blockchain Labs, a government-run Chinese company.
The sleuth then questioned why the SEC chair, Gary Gensler, taught an MIT class incorrect history regarding the project’s initial funding round (in his capacity as a lecturer).
Why is Gary Gensler teaching a false history on Ethereum’s ICO in his MIT class?
In this 🧵, I will show you that it was the CCP that invested in Ethereum in its pre-ICO days, and not Canadian VC’s like Gary teaches. pic.twitter.com/xfGtlux85C
— TruthLabs 🫡 (@BoringSleuth) April 19, 2023
For six months, applicants for a spot Ethereum ETF have been expecting a decision from the SEC, but the applications remain either pending or postponed.
A week ago, the U.S. SEC postponed its decision on Grayscale‘s proposal for spot Ethereum ETF. Some market observers believe that the delays are a prelude to denial of the applications.
This outcome would be in line with Lee’s reservations towards the prospects of Ethereum being the second cryptocurrency to gain ETF approval.
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