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LTC Grayscale submits new regulatory documents to transform Litecoin Trust into an ETF
Grayscale has advanced a new U.S. Securities and Exchange Commission (SEC) regulatory application to convert its Litecoin Trust into an exchange-traded fund (ETF). The company filed an amendment to its S-3/A registration statement on September 11, seeking to rename the tool to the "Grayscale Litecoin Trust ETF" and list its shares on NYSE Arca.
Litecoin Market Overview and Existing Trust Structure
Litecoin (LTC) remains one of the major cryptocurrencies by market value. At the time of its latest update, LTC was trading at approximately $53.45, down 0.6% in the past 24 hours. The price of the digital asset fluctuates between US$53.41 and US$54.24, with a market value of approximately US$4.15 billion, and a circulating supply of approximately 77.6 million LTC.
Grayscale's Litecoin Trust was launched in January 2018 and is currently traded on the over-the-counter market (OTC) under the symbol LTCN. The structure of trusts often results in the price of their shares being significantly higher or lower than the value of the underlying Litecoin they hold. For example, between August 2020 and June 2026, the premium on the trust's shares reached a maximum of 5,893%, with a maximum discount rate of 67%. The average premium was 592%, while the average discount rate was 26%.
The latest data highlights that the discount problem still exists. On September 9, the LTCN closed at $4.01, an 8% discount to its net worth (NAV). As of June 30, the trust reported a net value of approximately $82.3 million, with a net value per share of $3.39.
LTCN shares have been traded many times at prices well above or below the value of Litecoin held by the trust, sometimes at extreme premiums or discounts over a multi-year cycle.
ETF conversion process competes with the market
A recent SEC application does not allow Litecoin ETF to start trading immediately. Unless the SEC chooses to bypass separate approvals, NYSE Arca will still need to approve the listing process. This step began in January 2025, when NYSE Arca filed a Rule 19b-4 application to facilitate the conversion from trust to ETF. As of September 11, the application is still pending.
If the conversion is approved, the fund will be converted from an over-the-counter trust to a listed ETF and incorporate standard subscription and redemption mechanisms. The new structure will allow authorized participants to create or redeem baskets of 10,000 shares in cash, which will help allow ETF prices to more closely track underlying assets. Coinbase, as the major crypto asset exchange in the United States, will serve as the main broker for the ETF and provide asset custody services.
Mini Dictionary: Rule 19b-4 -An SEC rule that allows exchanges to propose new rules or changes, including listing new products, subject to review and approval by the U.S. Securities and Exchange Commission.
Grayscale, a well-known digital asset management company, has previously converted its flagship Bitcoin and Ethereum Trust into ETFs. Similar conversion attempts aim to address issues such as persistent price differences in trust-based models and provide investors with a more direct way to gain regulated Litecoin exposure through traditional brokerage accounts.
While Grayscale is preparing to enter the ETF space, competition has emerged. Investment management firm Canary Capital has launched the Litecoin ETF, allowing LTC to be open to public investors in an exchange-traded form. Still, Canary's Litecoin ETF attracted far less funding than the prominent Bitcoin and Ethereum funds, indicating that institutional demand for Litecoin products has been relatively modest.
Pending approvals and next steps
Grayscale's conversion proposal also coincides with the downsizing of its Litecoin Trust. The trust held more than US$215 million in assets at the beginning of 2025, but assets fell to approximately US$82.3 million as of June 2026, reflecting increasing competition and a shift in investor interest in the space.
Exchange listing approval for NYSE Arca is crucial for the conversion to take effect. The SEC has not yet made a decision on the pending application. Until the end of the process, LTCN products will continue to be traded as over-the-counter trusts rather than ETFs. The move to a listing structure will depend on regulatory review and approval.
If approved, the Grayscale Litecoin Trust ETF will enable investors to access Litecoin through mature brokerage accounts, making it easier for traditional investors to participate in the crypto asset market without directly managing LTC wallets.
