CBOE Files for First Meme Coin NFT ETF

The CBOE BZX Exchange has submitted a filing to the U.S. Securities and Exchange Commission (SEC) to list the Canary PENGU ETF. This proposed fund, if approved, would be the first of its kind to hold both a meme coin and non-fungible tokens (NFTs) in a single basket, marking an unprecedented combination in regulated finance. Canary Capital Group LLC is sponsoring the proposed fund, which will track PENGU, a utility token on the Solana blockchain, and Pudgy Penguin NFTs, one of the most popular Ethereum-based NFT collections. This innovative approach to digital asset structuring represents a new kind of crypto ETF, blending internet culture assets into a regulated investment vehicle.

The filing, submitted under Cboe BZX Rule 14.11(e)(4), which governs Commodity-Based Trust Shares, outlines a Delaware statutory trust that will not be registered under the Investment Company Act of 1940 or recognized as a commodity pool. The ETF will be cash-settled, issuing and redeeming shares in 10,000-share blocks for cash only, with no in-kind crypto redemptions or distributions. The trust will allocate 80–95% of its assets to PENGU tokens and 5–15% to Pudgy Penguin NFTs, with small amounts of SOL and ETH reserved for transaction fees and NFT purchases. Under normal market conditions, at least 95% of total assets must be invested in PENGU and NFTs.

Unlike traditional cryptocurrency ETFs that focus on tokens with their own blockchains, such as BTC or ETH, PENGU is described as a “digital collector’s item” and a “utility token” designed to unlock services within the Pudgy Penguins ecosystem. This unique structure addresses concerns around speculative volatility and market manipulation by emphasizing the geographically diverse and continuous nature of PENGU trading, making it difficult and prohibitively costly to manipulate the price of PENGU. Coordinated manipulation would require global price distortion across multiple platforms, not just isolated exchange activity. This approach aligns with the SEC’s long-standing concerns around market integrity for crypto-linked funds, which have previously led to the rejection of several high-profile Bitcoin spot ETF proposals.

The ETF’s mechanics are designed to fit within current SEC tolerance zones while minimizing complexities that could delay approval. The Net Asset Value (NAV) of the fund will be calculated daily at 4:00 p.m. ET, while Intraday Indicative Values (IIVs) will be disseminated every 15 seconds during normal trading hours. These data points, along with daily and historical NAVs, creation/redemption activity, and premium/discount information, will be made available to the public through the ETF’s website. The trust will not engage in proof-of-stake validation, and any rights stemming from forks, airdrops, or derivative chain activity will be disclaimed entirely. Investors will not receive distributions in crypto; the ETF will be strictly cash-based for both issuance and redemptions.

While the Form 19b-4 filing starts the clock on the approval process, Canary Capital Group LLC will still need to file a Form S-1, the actual registration statement with the SEC that includes risk, operations, and fund structure disclosures. This process can take months and may involve multiple comment rounds from regulators. Given the novelty of this product, which includes a utility token not backed by its own blockchain, NFTs, and no direct commodity classification, it is uncertain how the SEC will react. If approved, the Canary PENGU ETF could redefine what is considered an exchange-traded product in the U.S., setting a new precedent for digital asset investment vehicles.