Canary Capital Seeks Approval for First-Ever Staked TRX ETF

Asset management firm Canary Capital has filed with regulators to launch an exchange-traded fund (ETF) based on the Tron network’s native token, TRX. What sets this proposal apart is its unique approach—besides holding spot TRX, the fund intends to stake a portion of its holdings to generate yield.

According to data from StakingRewards.com, TRX currently offers an annualized staking yield of around 4.5%. This built-in return potential could make the ETF especially appealing to investors seeking passive income in addition to crypto exposure. 

TRX, which sits at a market capitalization of over $22 billion according to CoinMarketCap, is the native currency of the Tron blockchain—a proof-of-stake network founded by entrepreneur Justin Sun.

While filings for altcoin ETFs are becoming increasingly common, Canary’s proactive inclusion of staking in its initial application is rare. Typically, firms wait to gain approval for holding spot tokens before requesting permission to stake. For instance, ETFs tracking Ethereum have been waiting for regulatory clarity on staking well after securing approval to hold the asset itself.

SEC Lawsuit Still Looms Over Tron Founder

The filing does come with its share of controversy. In March 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Tron founder Justin Sun, accusing him of artificially pumping the prices of TRX and BitTorrent’s BTT token. 

Notably, both parties have since agreed to pause the proceedings as they explore a potential settlement. Still, the legal cloud adds an element of uncertainty that could influence regulatory decisions on the proposed fund.

Despite the legal scrutiny, the ETF filing reflects a growing willingness among asset managers to experiment with newer and less conventional tokens. Since the beginning of 2024, Canary has been aggressively expanding its crypto ETF ambitions, seeking approval for products tied to a variety of altcoins including Litecoin, XRP, Hedera, and even niche tokens like Pengu (PENGU) and Axelar (AXL).

Investor Caution Lingers Over Non-Core Crypto ETFs

However, not everyone is convinced this trend will gain serious traction. Some analysts believe the flood of altcoin ETF proposals may struggle to gain meaningful assets under management. 

“Most crypto ETFs will fail to attract AUM and cost issuers money,” warned Alex Krüger, a well-known crypto economist, in a recent post on X.

Still, Canary’s TRX ETF proposal could be a litmus test for how far the SEC is willing to go in recognizing altcoin-based investment vehicles—especially those aiming to unlock additional value through staking.