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The U.S. Securities and Exchange Commission (SEC) has invited public comments regarding Grayscale’s proposal to convert its Litecoin Trust into a publicly traded product. This announcement follows a 19b-4 application submitted by NYSE Arca. Comments are expected to be submitted within 21 days after publication in the Federal Register.
Application and Review Process
The document submitted by NYSE Arca previously includes applications for Grayscale’s Litecoin Trust as well as the Solana 
$164 Trust. The Commission may proceed to approve, reject, or conduct additional evaluations based on the comments received and the existing market risk factors. This process will prioritize investor protection and current regulations.
Public comments were also collected prior to the approval processes for BTC and ETH ETFs. The SEC has engaged with potential issuers to isolate risks associated with these products, indicating a likelihood of approval for Litecoin due to its structural similarities with Ether.
Market Developments and Other Products
Recently, various organizations have increased their applications for products based on Dogecoin 
$0.196905 and other alternative crypto assets. Grayscale’s efforts to similarly convert its XRP Trust have garnered attention. Additionally, the company’s Dogecoin Trust is now being offered to institutional investors through daily subscriptions.
In January 2024, the SEC approved spot Bitcoin 
$103,190 investment products and later greenlit Ethereum 
$2,251-based products, signaling flexibility in its regulatory approach towards the crypto asset sector. Within this framework, Grayscale’s application is seen as potentially influential for future product proposals.
The SEC’s final evaluation based on public comments could serve as a reference point in the regulatory process for crypto asset investment products. Investors highlight the importance of this process for risk management and market stability.
The Commission has noted that changes in leadership and the establishment of a crypto task force under Hester Peirce could influence regulations regarding the classification and registration processes of digital assets.
These developments may pave the way for increased product diversity in digital asset markets and the emergence of new investment opportunities. Market participants believe that the SEC’s forthcoming decision could guide the evaluation of similar applications in the future.
