Jun. 11, 2025
Hello, In response to several comments made on this proposed rule change, in particular, the following: “The SEC should be mitigating the risks of a financial crisis, not aggravating them. The SEC’s approval of spot bitcoin and spot ether ETPs endangered financial stability by entangling crypto with the traditional financial system. Approving the proposed rule change would further intertwine crypto with the financial system and exacerbate the risks to investors and markets.” What specific financial crisis is the commenter referring to? The FC of 2008? Were they as fearful of Enron and MCI Worldcom? It should be stated that exercising extreme caution, for this particular application, Canary Litecoin ETF, contradicts the SEC’s previous approval of several existing Bitcoin and Ethereum ETFs, currently trading successfully in the marketplace. I would like to point out that the commenter did not refer directly to the Canary “Litecoin” ETF application as well, referring to Bitcoin and Ethereum ETFs which have already been approved. To deny the Canary Litecoin ETF application would assume that the SEC would also have to retract approvals for all BTC and Ethereum ETFs, already trading, otherwise risking bias in the approval process. Litecoin, like Bitcoin, is a decentralized, Proof of Work (PoW) cryptocurrency with a capped supply of 84 million, as opposed to Bitcoin’s 21 million supply cap. These two cryptocurrencies, Bitcoin and Litecoin, the first “original” cryptocurrencies, share many similar attributes and characteristics, where their main differences lie specifically in the computer coding of the underlying protocols. As decentralized, independent cryptocurrencies, protocol changes are made by “miner consensus,” as opposed to a small group of biased, self-serving individuals. In the US spot markets, as well as with many foreign crypto exchanges, current governing regulatory body exists which precludes, or “mitigates,” many of the risks alluded to by the commenter, quoted above. It should also be articulated that the global and US financial markets are dynamic entities, having historically supported new, innovative products, such as CDOs, MBSs, and other financial products that, 50 years ago, never existed. To say that following this approach with cryptocurrencies would inject unacceptable risk in the markets makes one wonder whether the commenter had any problems with these other financial products in the past, or whether it is specific to fear of “the unknown,” or least understood financial products, cryptocurrencies. The crypto exchanges are already regulated in the United States. The level of scrutiny is higher than for any other type of exchange. Fear of spot market manipulation, and how such would affect the Canary Litecoin ETF, begs the question as to whether the answer is no further than reviewing the SEC’s past analyses of the various Bitcoin ETFs it has already approved, since the two coins, Bitcoin and Litecoin, are fundamentally the same commodity type, with the same structural characteristics, and thus, equally riskless or risky. The SEC is never going to ensure that no risk exists in any financial product entering the exchanges, especially those which represent new, innovative, financial technologies (Ref: CDO and MBS examples). Currently, the US government is directly investing in cryptocurrencies. Congress is also working toward additional regulatory body which supports the growth and use of cryptocurrencies in this country. There have been many members of Congress who have supported, publicly, cryptocurrencies and their acceptance in this country. The CBOE officially recognizes both Bitcoin and Litecoin as commodities, and has done so for many years. Both cryptocurrencies are “decentralized.” These are the types of assets which should be approved for ETF investment and trading in the existing financial markets, whereas “centralized” cryptocurrencies, or tokens, SHOULD be heavily scrutinized, before approving associated ETFs for trading in US markets, as the risk levels are significantly higher, with the underlying tokens subject to severe centralized manipulation by small groups of developers, a risk absent for in PoW cryptocurrencies. It is for all of the aforementioned reasons that the SEC should approve the Canary Litecoin ETF application, as well as all other Litecoin ETF applications pending, just as the SEC did for previous Bitcoin ETF applications in the past. The quoted commenter’s fears are misplaced for this and other Litecoin ETFs, representing a level of fearmongering which does not belong in the SEC’s approval consideration process. Thank you. Best regards, D. Allen Shinners USA (MBA, International Business & Finance, Auditor)