Canary Capital Files for First TRX Staking ETF

Canary Capital, a firm based in Nashville, Tennessee, has filed an application with the U.S. Securities and Exchange Commission (SEC) to launch an exchange-traded fund (ETF) that will hold the native token of the Tron blockchain network, TRX. The proposed ETF, named the Canary Staked TRX ETF, aims to provide investors with exposure to the price movements of TRX while also incorporating staking features. This filing, submitted on April 18, is the first of its kind for TRX and represents a significant development in the evolution of crypto investment products.

The Canary Staked TRX ETF is designed to hold actual TRX tokens, with custody managed by BitGo Trust Company. The ETF will not only offer investors the potential for capital appreciation but also the opportunity to earn staking rewards, which are typically associated with proof-of-stake (PoS) blockchain networks. The inclusion of staking features is a notable development, as it allows investors to participate in the network's consensus mechanism and earn additional income.

However, the path to regulatory approval for this ETF is fraught with challenges. The SEC has historically been cautious about integrating staking into regulated financial products, citing concerns such as redemption timelines, tax treatment complexities, and the potential for staking services to constitute an unregistered securities offering. Initial Ethereum ETF proposals that included staking features were required to remove them during the review process, highlighting the regulatory hurdles that Canary Capital may face.

Despite these challenges, there is growing support within the crypto industry and among lawmakers for the inclusion of staking in crypto exchange-traded products. Representatives from the crypto industry met with the SEC’s Crypto Task Force in February to present models that address the regulatory concerns, such as using third-party services for staking and liquid staking tokens. Additionally, Senator Cynthia Lummis and other U.S. senators sent a letter to the SEC in February, requesting clarity on the exclusion of staking and arguing that the current policy disadvantages U.S. asset managers compared to international competitors.

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, indicating that the regulatory landscape for staking in crypto ETFs remains uncertain. Canary Capital's proposal for the Canary Staked TRX ETF represents a bold move to expand crypto investment products beyond traditional spot holdings and explore yield-generating features tied to PoS blockchain networks. If approved, this ETF could set a precedent for future crypto ETFs that incorporate staking, potentially opening up new opportunities for investors and further integrating crypto assets into the mainstream financial system.

Canary Capital has previously filed for a number of other altcoin ETFs, including funds that, if approved, would give investors exposure to Litecoin (LTC), Ripple’s XRP, Hedera (HBAR), and Pengu (PENGU). The appeal of crypto ETFs has been that they give traditional investors exposure to an asset without requiring them to buy and store it themselves. The US Securities and Exchange Commission authorized ETFs holding Bitcoin and Ether to list in the US in 2024, but has not yet approved any other altcoin ETFs. Since U.S. President Donald Trump’s inauguration on Jan. 20, the Securities and Exchange Commission has acknowledged dozens of new altcoin ETF filings. Proposed ETFs include funds holding native layer-1 tokens such as Solana and SUI, as well as meme tokens like Dogecoin (DOGE) and Official Trump (TRUMP).

President Trump has said he wants America to become the world’s crypto capital and has appointed pro-crypto leaders to key regulatory agencies, including the SEC. The flurry of altcoin ETF applications reflects issuers’ growing efforts to address demand for crypto investment products. However, the regulator has yet to approve a staking component in a crypto ETF, and on Monday, the regulator postponed a decision on a proposed rule change that would enable Grayscale’s spot ETH funds to engage in staking on Ethereum.