Canary and Grayscale Launch Staking-Enabled Sui ETFs for US Investors

Canary Capital and Grayscale Investments have officially launched the first Sui (SUI) exchange-traded funds (ETFs) in the United States, offering investors direct exposure to the Layer-1 blockchain with the added benefit of staking rewards. The new funds began trading this week amid a complex market environment, marking a significant milestone where traditional finance vehicles now support yield generation for the asset.

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Staking-Enabled ETFs Expand Regulated Crypto Product Offerings

The debut of staking-enabled ETFs marks an evolution in regulated crypto products. While spot Bitcoin and Ethereum ETFs have dominated inflows since early 2024, the inclusion of staking rewards aligns these new institutional products more closely with native crypto yield mechanics.

This move follows broader market trends in which issuers seek to differentiate products through yield generation. For example, Bitwise is deepening its yield strategy through infrastructure acquisitions. However, the launch arrives during a challenging period; Bitcoin price drops and weakening institutional interest have set a somber tone for new entrants, testing the appetite for altcoin exposure.

Spot ETF Market Share by Coin (Excluding BTC and ETH) Source: The Block

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How Sui ETFs With Staking Work

Canary’s fund is now trading on the Nasdaq under the ticker SUIS, while Grayscale converted its existing trust into an ETF trading on the NYSE Arca as GSUI. A primary differentiator for these products compared to earlier crypto ETFs is the integration of staking mechanics directly into the fund structure. According to Grayscale, GSUI captures staking activity inherent to the Proof-of-Stake network, carrying a 0.35% sponsor fee that is waived for the first three months or until assets reach $1 billion.

Krista Lynch, Senior Vice President of ETF Capital Markets at Grayscale, highlighted the strategic value in a statement:

Canary CEO Steven McClurg similarly noted that the company’s product enables investors to benefit from “net staking rewards.” Notably, the two products differ in their regulatory structures, with Canary’s offering a fully registered 1940 Act fund. Unlike recent Ethereum ETF inflow dynamics where staking was often excluded due to regulatory caution, these Sui products aggressively target yield-seeking institutions.

Impact on Altcoin Capital Flows and Staking Economics

Despite the milestone for institutional access, the immediate market reaction has been muted. SUI is trading near $0.95, reflecting broader altcoin weakness and significant selling pressure. The launch mirrors similar “sell-the-news” events, akin to how the CME Cardano futures launch triggered dips in previous cycles regardless of the long-term infrastructure benefits. Analysts suggest that while the structural innovation of staking ETFs is significant, current bearish flow analysis indicates investors are largely exiting speculative positions, leaving the new ETFs to prove whether yield can attract sticky capital during a downturn.

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