Analysts Predict 90% Chance for SEC Approval of Litecoin ETF in 2025

Analysts from Bloomberg have given a 90% likelihood that the U.S. Securities and Exchange Commission (SEC) will approve a spot Litecoin ETF before the end of 2025. In a recent report, Bloomberg ETF experts James Seyffart and Eric Balchunas placed Litecoin ahead of other proposed crypto ETFs, including spot XRP, Solana, and Dogecoin ETFs, which they estimate have approval chances of 65%, 70%, and 75%, respectively.

Litecoin, launched in 2011 as a faster alternative to Bitcoin, shares a similar proof-of-work consensus mechanism with the leading cryptocurrency. According to Seyffart and Balchunas, Litecoin’s path to SEC approval appears more straightforward than that of other digital assets. This is due in part to the fact that the necessary regulatory filings, including the S-1 and 19b-4 forms, have already been submitted and acknowledged. Additionally, the SEC is likely to view Litecoin as a commodity, which could further smooth the approval process.

The growing demand for cryptocurrency exchange-traded funds (ETFs) follows the strong performance of spot Bitcoin and Ether ETFs, which saw impressive net inflows of $40.7 billion and $3.18 billion, respectively, since their launches in January and July 2024, according to data from Farside Investors. However, while Seyffart doesn’t expect the Litecoin ETF to see the same level of demand, he still considers it a viable opportunity for fund companies, with even modest inflows of $50 million potentially making it worthwhile for issuers.

“They don’t have to hit it out of the park on a flows basis to be worthwhile from an issuer perspective,” Seyffart explained.

The SEC’s final deadline to make decisions on several proposed crypto ETFs, including those for Litecoin, Solana, XRP, and Dogecoin, is set between October 2 and October 18, 2025. Seyffart suggested that a Litecoin ETF could potentially launch ahead of that timeline.

Growing Interest in Crypto ETFs

Seyffart and Balchunas also noted that ETFs for other digital assets, such as Hedera (HBAR) and Polkadot (DOT), had been filed by Canary Capital and 21Shares. However, they did not yet place any approval odds on these filings as of the report's publication.

Looking ahead, Seyffart predicted that more crypto ETFs could be proposed in the coming months. He suggested that U.S.-based ETF issuers will likely take a "spaghetti cannon approach," launching multiple funds to see which ones gain traction. He added, "You will probably see a long tail of ETFs holding digital assets in the long run, and the ones that don't garner interest or flows will simply liquidate."

Challenges for Solana and XRP ETFs

While the Litecoin ETF has a strong chance of approval, regulatory hurdles remain for other digital assets, particularly XRP and Solana. Seyffart noted that the SEC’s lawsuit against Ripple, which is central to the legal status of XRP, could delay the approval of an XRP ETF. In August 2023, Ripple scored a partial victory when a court ruled that XRP was not a security when sold on secondary markets. However, the SEC appealed the decision, arguing that Ripple violated securities laws when selling XRP to retail investors.

The outcome of the lawsuit could significantly impact the timeline for an XRP ETF approval. Ripple is hopeful that the SEC's new leadership, under acting chair Mark Uyeda, might reconsider the enforcement case.

Similarly, Solana’s status as a commodity or security remains uncertain. Seyffart highlighted that the SEC would need to resolve these questions before it could assess a potential Solana ETF.

A New Era for Crypto ETFs

As the crypto market matures, ETF proposals are likely to continue growing. Despite the challenges and regulatory uncertainties surrounding certain assets, the increasing institutional interest in crypto ETFs reflects the continued evolution of digital asset investment vehicles. The approval of a Litecoin ETF in 2025 would mark a significant milestone in this journey, further legitimizing the cryptocurrency space for traditional investors.