Highlights: Canary Capital has filed a proposal with the SEC for a spot TRON exchange-traded fund (ETF) that uniquely includes staking rewards. The application faces regulatory uncertainty due to the SEC's historical opposition to staking features in investment products. If approved, the TRON ETF could be a significant step in offering both market exposure and yield to investors.

Hifi Tech India

The proposal, submitted on April 18, is the first of its kind to offer investors exposure to TRX’s market performance while also providing staking rewards. This sets the fund apart from previous spot crypto ETF proposals.

Canary Capital’s TRX ETF Could Test SEC Stance on Staking Assets

The filling designates BitGo Trust Company as the custodian for TRX holdings and appoints Canary Capital as the fund’s sponsor. Justin Sun,the founder of Tron, weighed in on the development, encouraging US investors to act promptly. He emphasized TRX’s potential for long-term growth and suggested institutional interest would likely surge if the ETF is approved.

TRX is currently the ninth-largest crypto by market capitalization, valued at approximately $22.94 billion.

Moreover, Tron’s blockchain has gained  straction in stablecoin settlements ranking second only to Ethereum. Its efficiency in processing fast and low-cost transactions has made it a preferred choice for Tether’s USDT, based on data from DeFiLlama.

While the proposal has created a buzz in the market, questions remain over its chances of gaining regulatory approval. The inclusion of staking within the ETF is a bold move, but the SEC has historically opposed similar features in other crypto funds.

The SEC has flagged staking services within investment products as potential unregistered securities, leading to increased scrutiny.Due to this, past Ethereum ETF proposals were forced to remove staking components to align with regulatory expectations.

Nonetheless, several firms, including Grayscale, continue to push for altcoin ETFs that incorporate staking or offer broader asset exposure.

Still, regulatory uncertainty clouds the Canary TRX ETF proposal, especially in light of past controversies involving Justin Sun. The network has also faced allegations of being used by illicit actors, claims it has publicly denied.

If approved, Canary Capital’s ETF would mark a historic milestone by combining exposure to TRX with staking rewards. This structure could attract both retail and institutional investors seeking yield alongside market performance.