Canary Capital has filed for a new exchange-traded fund (ETF) with the US Securities and Exchange Commission (SEC), proposing the Canary Staked TRX ETF launch. The fund would provide investors with exposure to the price movements of TRX while incorporating staking features. The application is currently pending regulatory approval, and if approved, it would be the first ETF related to TRX. The ETF would hold actual TRX tokens, with custody managed by BitGo Trust Company.
The move represents an effort to expand crypto investment offerings beyond traditional spot holdings and explore yield-generating features tied to proof-of-stake (PoS) blockchain networks. However, including staking in US-listed crypto ETFs remains a disputed regulatory issue. The SEC has historically prevented staking from being included in crypto exchange-traded products (ETPs). Initial Ethereum ETF proposals had staking features included but were later required to remove them during the review process.
The SEC has raised concerns about integrating staking into regulated financial products, citing issues such as redemption timelines that could disrupt the standard settlement cycle, tax treatment complexities related to staking rewards, and questions about whether staking services could constitute an unregistered securities offering. Representatives from the crypto industry have met with the SEC’s Crypto Task Force to address these concerns, proposing models that involve using third-party services for staking and liquid staking tokens.
Senator Cynthia Lummis and other US senators have also sent a letter to the SEC requesting clarity on the exclusion of staking in crypto ETPs. They argue that the current policy disadvantages US asset managers compared to international competitors in countries like Canada, Europe, and the United Kingdom. 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 on these rule changes are now expected by June 2025.
In conclusion, the Canary Staked TRX ETF proposed by Canary Capital seeks to offer investors exposure to TRX price movements while incorporating staking features. The SEC’s historical stance on including staking in regulated financial products poses a hurdle for such products, citing potential disruptions to settlement cycles, tax complexities, and concerns about securities offerings. Despite efforts from the crypto industry and US senators to address these concerns and seek clarity from the SEC, decisions on rule changes related to crypto ETPs are still pending, with expected outcomes by June 2025.
