Canary Capital Files for First Spot TRX ETF with 4.5% Staking Rewards

Canary Capital, a United States-based asset manager, has filed a Form S-1 registration with the Securities and Exchange Commission (SEC) to launch a spot exchange-traded fund (ETF) based on the Tron (TRX) cryptocurrency. This proposed ETF will maintain TRX tokens alongside stake-based reward functions, offering TRON investors an exclusive dual-functioning investment tool unique within U.S. financial markets. BitGo Trust Company has been selected as the custodian for the TRX ETF crypto holdings, ensuring the protective authority of ownership for TRX assets. The fund’s sponsor role will be taken by Canary Capital, with an investment strategy focused on delivering TRX price exposure together with stake rewards for investors who participate in yield generation.

Justin Sun, the founder of Tron, expressed his perspective on the TRON news through a social media post. He recommended that U.S. investors take immediate action, declaring TRX as a solid investment with a steadily growing market value. Sun advised American venture capital institutions to purchase TRX tokens promptly, emphasizing the potential for significant price appreciation.

The proposed ETF faces multiple obstacles during its current implementation. The SEC has historically pushed back against ETFs that incorporate staking services within their structures. Previous attempts by similar Ethereum ETF proponents had to discontinue staking elements due to regulatory reasons. The SEC maintains that different staking services fall under the category of unregistered securities, causing legal challenges. Despite this, some firms continue to push forward. For example, Grayscale is advocating for ETFs that include staking and broader crypto exposure. Other nations are currently succeeding with their efforts to create crypto ETFs. The risk increases because of the SEC’s stern position regarding staking while Justin Sun faces longstanding controversies. The Tron network has previously been accused of being used for illegal activities. Although the team behind Tron denies these claims, they may still affect the ETF’s chances of approval.

If the ETF is approved, it would create a significant advancement for the industry sector. The United States has not witnessed an ETF delivering combined exposure to crypto assets while paying staking rewards until this point. Retail along with institutional investors may show interest in this structure as a way to obtain returns above basic price appreciation. The proposed ETF plans to hold and stake TRX, the native token of the Tron blockchain. Staking TRX generates an annualized yield of approximately 4.5%. This feature sets the proposed ETF apart from other US ETFs, such as those holding the Ethereum network’s native token, Ether (ETH), which have sought approval for staking only after successfully listing a fund holding the spot token. The TRX token has a total market capitalization of more than $22 billion, making it a substantial player in the cryptocurrency market.

Canary Capital's filing is part of a broader trend of submissions aimed at listing ETFs holding alternative cryptocurrencies, or “altcoins.” However, the inclusion of staking rewards in the initial application makes it relatively unique. The Tron blockchain network, founded by Justin Sun, is a proof-of-stake network, which means that token holders can earn rewards by participating in the network's consensus mechanism. This feature could attract investors looking for both capital appreciation and passive income. The regulatory environment for cryptocurrency ETFs has been evolving, with the SEC acknowledging dozens of filings for proposed crypto investment products since 2024. Canary Capital has filed for several proposed US crypto ETFs, including funds holding Litecoin (LTC), XRP (XRP), Hedera (HBAR), Axelar (AXL), Pengu (PENGU), and Sui (SUI). The success of the Canary Staked TRX ETF could influence the approval of these and other similar ETFs.

The filing has sparked speculation among market watchers about how the new fund could tap into Tron's staking rewards. The inclusion of staking rewards could make the ETF more attractive to investors, as it provides an additional source of income. However, some industry analysts doubt that ETFs holding non-core cryptocurrencies will be embraced by traditional investors. The success of the Canary Staked TRX ETF will depend on its ability to attract assets under management (AUM) and generate returns for investors. In conclusion, Canary Capital's filing for the first spot TRX ETF with staking rewards is a significant development in the cryptocurrency ETF landscape. The inclusion of staking rewards sets it apart from other ETFs and could attract investors looking for both capital appreciation and passive income. The success of the Canary Staked TRX ETF will depend on its ability to attract AUM and generate returns for investors. The regulatory environment for cryptocurrency ETFs is evolving, and the approval of the Canary Staked TRX ETF could pave the way for similar ETFs in the future.