Cboe BZX Exchange recently made headlines by filing a proposed rule change with the Securities and Exchange Commission to introduce the Canary Staked TRX ETF. This groundbreaking move marks the first-ever attempt to register a US-based spot Tron ETF fund offering staking rewards.
What exactly does this fund entail? The ETF, sponsored by Canary Capital, is set to stake a portion, and possibly all, of its TRX holdings through trusted providers, with staking rewards directly contributing to funding Net Asset Value (NAV). This unique structure allows investors to not only gain exposure to TRX’s spot price but also earn yield from the network’s delegated proof-of-stake system. Currently, the TRX staking yield stands at approximately 4.6% APR, according to StakingRewards.
The Canary Staked TRX ETF will track the CoinDesk TRX USD CCIX 60-minute New York Rate, a Pricing Benchmark that aggregates notional TRX spot trades across major venues and is updated every 15 seconds. NAV will be calculated daily at 4 P.M. ET based on this index. Shares will be created and redeemed in 10,000-share baskets for cash only, with BitGo serving as the custodian. All staking activities will be carried out at the trust level, ensuring authorized participants are shielded from direct TRX exposure or staking delegation rights.
Cboe has put forth compelling arguments in favor of accepting the ETF. The exchange asserts that the proposed product does not necessitate a surveillance-sharing agreement with a “regulated market of significant size,” a requirement introduced in the SEC’s 2018 Winklevoss disapproval order. Instead, Cboe points to recent SEC approvals of spot Bitcoin and Ethereum products, where other means to detect and deter manipulation were accepted in lieu of a large futures market. The exchange contends that similar reasoning applies to TRX, given its decentralized market structure, deep liquidity, global trading availability, and robust arbitrage activity.
If granted approval by the SEC, this would mark the first time a US-listed crypto ETF incorporates a native staking component. While previous Ethereum-based funds skirted regulatory ambiguity by excluding staking, the TRX filing explores the feasibility of incorporating delegated proof-of-stake tokens within public fund structures. The filing sets the stage for potential staking-enabled ETPs across other PoS networks like Solana, Polkadot, and Cosmos.
As the SEC deliberates on the proposed rule change, the industry eagerly anticipates the outcome. If greenlit, the Canary Staked TRX ETF could pave the way for innovative staking-enabled ETPs and offer investors a new avenue for capitalizing on crypto assets. The ETF’s unique structure and potential to attract yield-seeking capital in a low-interest-rate environment underscore the evolution of crypto investment products beyond basic price exposure.
Stay tuned for updates on the SEC’s decision timeline regarding the Canary Staked TRX ETF proposal. This groundbreaking initiative could reshape the landscape of crypto ETF offerings in the US and beyond.