Industry Background of the TRX Staking ETF Application
Recently, U.S. asset management firm Canary Capital submitted an application to the Securities and Exchange Commission (SEC) for the Canary Staked TRX ETF—the world’s first exchange-traded fund that combines spot TRX price tracking with staking yields. If approved, this product would not only provide traditional investors with a compliant exposure to cryptocurrency but also, for the first time, allow access to staking rewards via an ETF structure—marking another breakthrough in the financialization of crypto assets.
The timing of this application is closely tied to recent market trends. Since the approval of Bitcoin and Ethereum ETFs in 2024, institutional demand for compliant products tied to “non-mainstream tokens” has grown significantly. Tron (TRX), a top 10 blockchain by market cap, has become the first Altcoin selected, due to its high throughput and low-cost stablecoin transfer ecosystem (with on-chain USDT volume second only to Ethereum). Moreover, the SEC’s new chairman, Paul Atkins, has adopted a more pragmatic stance toward crypto regulation, opening a potential window for staking ETFs.
How the TRX Staking ETF Works
According to public documents, the Canary Staked TRX ETF will directly hold spot TRX tokens and stake a portion of them through a third-party provider (not yet disclosed), with an expected annual yield of 4.5%. Custody will be handled by regulated entity BitGo Trust, and pricing will track the CoinDesk Index. Unlike existing crypto ETFs, this product combines capital appreciation with passive income, targeting long-term investors interested in the “hold-to-earn” model.
Investors can track TRX prices in real-time via JuCoin to capture market fluctuations. If the TRX ETF is approved, it could pave the way for similar products based on Solana, XRP, and others, boosting the overall valuation of the crypto market.
Regulatory Challenges and Potential Risks
Despite the promising outlook, the TRX staking ETF still faces several hurdles. The primary concern comes from the SEC’s regulatory stance. Current U.S. securities laws do not clearly define “staking services,” and the SEC may invoke the Howey Test to determine whether it qualifies as an unregistered security. Previously, the Ethereum ETF was forced to remove staking elements due to opposition from former Chairman Gary Gensler. The approach taken by new Chairman Paul Atkins will be a critical variable.
Another risk is associated with compliance concerns within the Tron ecosystem. Tron founder Justin Sun was sued by the SEC in 2023 for alleged market manipulation. Although the case has yet to be resolved, this history may influence the SEC’s assessment of the TRX ETF. Furthermore, technical issues around the staking process could raise questions—for example, the mismatch between the unstaking period and the ETF’s T+1 redemption rule could lead to liquidity risks if not handled properly.
Retail investors should also be aware of tax implications. Under current IRS rules, staking rewards must be reported as taxable income based on their fair market value when received, potentially complicating tax filings.
Long-term Impact on the Crypto Market
If approved, the TRX staking ETF’s significance would go far beyond a single product. First, it would break the ETF monopoly of BTC and ETH, encouraging more Altcoins to enter the mainstream asset management market. Industry forecasts suggest that by 2026, the Altcoin ETF market could exceed $50 billion, with staking functionality becoming a standard feature. Second, the inflow of institutional capital would enhance liquidity and reduce price volatility for tokens like TRX, further stabilizing the market.
However, this development may also lead to a polarization effect. Tokens with higher compliance standards (like TRX and SOL) may attract more capital, while small-cap tokens face marginalization. In addition, the deep integration of traditional finance and crypto may force regulators to accelerate improvements in legal frameworks—clarifying the legal status of staking and standardizing cross-border tax policies.
Neason Oliver
