In April 2025, Canary Capital submitted an application to the U.S. Securities and Exchange Commission for the launch of the first exchange-traded fund (ETF) tracking the Tron cryptocurrency with an integrated staking mechanism to enhance returns. The fund will be registered as a Delaware Statutory Trust and will hold assets with Coinbase Custody Trust Company or BitGo Trust Company, and will be listed on the Cboe BZX Exchange, relying on the CoinDesk TRX Price Index to adjust the fund's daily value. This project is the 13th in the race for proposed 'spot' cryptocurrency funds and aims to provide an approximate annual return of around 4.5% through direct staking of TRX within the fund's structure itself. The announcement generated positive reactions, with the cryptocurrency seeing a 35% increase in trading volume on Binance in the first hour and its price rising from $0.05 to $0.065. However, the fund faces technical and regulatory risks, price volatility, and fluctuations in the SEC's stance on staking, making close monitoring essential until the final approval decision is issued.
Introduction
Recently, cryptocurrency markets have experienced a race among digital asset companies to offer exchange-traded funds (ETFs) targeting Layer-1 foundational businesses in addition to Bitcoin and Ethereum, including Canary Capital's application for a TRX ETF integrated with a staking mechanism. The goal of this fund is to enable investors to gain direct exposure to TRX while also achieving additional returns through staking, opening a new appetite for institutional funds and decentralized finance enthusiasts.
What is TRX ETF?
Definition of the Fund
The fund is an investment instrument traded on the stock exchange that reflects the actual price of TRX while periodically adding the returns generated from staking to increase the daily net asset value (NAV).
Filing and Regulatory Body
– Canary Capital submitted its application to the SEC on April 18, 2025, as a Delaware Statutory Trust.
– The fund will be structured as a trust, giving investors economic rights over the fund's assets without direct ownership of the cryptocurrencies.
Structural Features
Assets and Staking
– The fund will hold actual TRX coins and allocate a portion for staking participation through the Tron network, providing returns around 4.5% annually according to StakingRewards.com.
– Returns will be automatically reinvested in the fund to enhance the daily NAV without the use of derivatives or leverage.
Responsible Entities
– Sponsor: Canary Capital Group LLC.
– Trustee: CSC Delaware Trust Company.
– Custodian: Coinbase Custody Trust Company or BitGo Trust Company to ensure the security of private keys and manage staking.
Listing and Pricing
– The fund will be listed on the Cboe BZX Exchange, the same exchange that recently filed for an Ethereum staking fund.
– The TRX price is determined based on the CoinDesk TRX Price Index to ensure accurate tracking of the actual price.
Features of Investing in TRX ETF
Direct exposure to TRX
The fund provides the possibility to buy shares listed on a traditional exchange for exposure to TRX price movements without the need to deal with cryptocurrency wallets or decentralized platforms.
Returns from staking
The combination of price exposure and annual returns from staking is a distinguishing feature of the fund, as it allows for nearly fixed passive income around 4.5% without the technical complications of managing staking personally.
Risks and Challenges
Technical and Regulatory Risks
– The U.S. Securities and Exchange Commission (SEC) still maintains an unclear position regarding allowing staking ETFs, exposing the ETF application to prolonged review and regulatory challenges.
– Governments may target stricter regulation on staking as they consider it in some cases similar to lending or bonds.
TRX Price Volatility
As TRX is a digital asset, it is characterized by high price volatility that may quickly affect the fund's value, necessitating effective risk management.
Timeline for Progress and Approval
– March 21, 2025: Justin Sun announced the intention to offer an ETF for TRX via a tweet on X (Twitter).
– April 18-19, 2025: Canary Capital officially submitted the application to the SEC, making TRX the 13th cryptocurrency in the race for 'spot' crypto funds.
– Near Future: Many expect the SEC to take a few months for review, with investors closely monitoring regulatory feedback.
Market Reactions
The announcement sparked immediate reactions in the digital markets, as:
The trading volume of TRX on the Binance platform increased by 35% during the first hour of the announcement, approaching 250 million TRX.
TRX's price jumped from $0.05 to $0.065 in the same time frame.
Justin Sun shared a positive tweet confirming the fund's viability on X, which boosted confidence among followers.
Conclusion
The Canary Capital Staking TRX ETF represents a bold step in integrating traditional finance with the staking gains specific to the Tron network, and it may pave the way for similar funds for other cryptocurrencies in the future. Despite its promising potential, the SEC's final decision remains the critical factor in determining the fate of this unique investment product. Monitoring regulatory developments and the associated risks is essential for any investor considering adding this fund to their portfolio.
