Canary Capital Files for TRX ETF with Staking, SEC Approval Pending

United States asset manager Canary Capital has filed to list an exchange-traded fund (ETF) holding the Tron blockchain network’s native token, TRX. The fund intends to hold spot TRX and stake a portion of the tokens for added yield. The TRX token has a total market capitalization of more than $22 billion. Staking TRX generates an annualized yield of approximately 4.5%.

This filing is part of a broader trend of submissions aimed at listing ETFs holding alternative cryptocurrencies, or “altcoins.” However, Canary’s proposed fund is unique in requesting permission to stake its crypto holdings in its initial application. Other US ETFs, such as those holding the Ethereum network’s native token, Ether (ETH), have sought approval for staking only after successfully listing a fund holding the spot token and are still awaiting a regulatory decision.

Tron is a proof-of-stake blockchain network founded by Justin Sun. In March 2023, the SEC sued Sun for allegedly fraudulently inflating the prices of the Tron token and BitTorrent’s BTT token. In February, the SEC and Sun asked the judge overseeing the lawsuit to pause the case to allow the parties to enter into settlement talks.

Canary Capital has submitted a filing with the US Securities and Exchange Commission (SEC) for a new exchange-traded fund (ETF) that would track the price of Tron's TRX token and include staking capabilities. The proposed fund, named the Canary Staked TRX ETF, aims to offer investors exposure to the price movements of TRX while incorporating staking features. This is the first ETF related to TRX and represents an attempt to expand crypto investment products beyond traditional spot holdings, exploring yield-generating features tied to proof-of-stake (PoS) blockchain networks.

The ETF would hold actual TRX tokens, with custody managed by BitGo Trust Company. The application is pending regulatory approval, and the fund would offer investors exposure to the price movements of TRX while incorporating staking features. The move comes as lawmakers and crypto figures push for the inclusion of staking in crypto exchange-traded products. However, staking within US-listed crypto ETFs remains a contested regulatory issue.

The SEC has historically prevented staking from being included in crypto exchange-traded products (ETPs), raising multiple concerns about integrating staking into regulated financial products. These concerns include the redemption timelines that could disrupt the standard T+1 settlement cycle, tax treatment complexities related to staking rewards, and questions about whether staking services could constitute an unregistered securities offering. Initial Ethereum ETF proposals included staking features but were later required to remove them during the review process.

Representatives from the crypto industry met with the SEC’s Crypto Task Force on February 5, presenting models to address these concerns, such as using third-party services for staking and liquid staking tokens. Moreover, Senator Cynthia Lummis and other US senators sent a letter to the SEC in February, requesting clarity on the exclusion of staking and arguing that the current policy disadvantages US asset managers compared to international competitors.

However, the SEC has delayed decisions on two major rule changes related to crypto ETPs, including the Grayscale Ethereum Trust’s request to stake a portion of its holdings. Decisions are now expected by June 2025. The filing by Canary Capital for the Canary Staked TRX ETF is a significant development in the crypto investment landscape, as it represents an attempt to expand crypto investment products beyond traditional spot holdings and explore yield-generating features tied to PoS blockchain networks. The move comes as lawmakers and crypto figures push for the inclusion of staking in crypto exchange-traded products, but staking within US-listed crypto ETFs remains a contested regulatory issue.