Canary Capital Files for PENGU ETF, First US NFT-Inclusive Fund

Asset manager Canary Capital has submitted a filing to list an exchange-traded fund (ETF) that will hold PENGU, the governance token of the Pudgy Penguins non-fungible token (NFT) project. This move is part of a broader trend of new investment products tied to spot cryptocurrencies, including various altcoins and memecoins. The proposed ETF aims to hold spot PENGU tokens as well as a selection of Pudgy Penguins NFTs, positioning itself as a pioneer if approved, as it would be the first US ETF to include NFTs in its holdings. Additionally, the ETF is designed to hold other digital assets such as SOL and ETH, which are necessary for the purchase, sale, and transfer of PENGU and Pudgy Penguins NFTs.

Launched in December, Pudgy Penguins has established a significant presence in the NFT market, with a market capitalization of approximately $438 million as of March 20. This filing follows Canary Capital's earlier submission on March 18 to list the first US ETF holding SUI, the native token of the Sui layer-1 blockchain network. The Pudgy Penguins brand is recognized as one of the most popular NFT projects, further underscoring the potential appeal of the PENGU ETF to investors.

The US Securities and Exchange Commission (SEC) has received numerous filings for new crypto investment products since the beginning of the year. These filings include proposals for ETFs focused on native layer-1 tokens such as Solana (SOL) and XRP (XRP), as well as memecoins like Dogecoin (DOGE) and Official Trump (TRUMP). However, some industry analysts express skepticism about the uptake of ETFs holding non-core cryptocurrencies among traditional investors. Crypto researcher Alex Krüger commented on the announcement, stating that new ETFs for crypto assets have become an irrelevant joke and that most crypto ETFs will fail to attract assets under management and cost issuers money.

Since the start of the current presidential term, there has been a policy reversal regarding digital assets, with a promise to make the region a global leader in crypto. This shift contrasts with the previous administration, which saw over 100 enforcement actions against crypto firms. The filing of the PENGU ETF by Canary Capital reflects this changing regulatory landscape and the growing acceptance of digital assets within traditional financial products. The ETF's actively-managed structure allows for dynamic adjustments to its holdings, providing investors with the flexibility to capitalize on market opportunities and mitigate risks. If approved, the PENGU ETF would offer investors a unique opportunity to gain exposure to both PENGU tokens and Pudgy Penguins NFTs through a single investment vehicle, enhancing its liquidity and accessibility.