Canary Capital frequently submits ETF applications. Has the copycat ETF application become a disguised advertising business?

Author: Weilin, PANews

On March 20, the US financial institution Canary Capital submitted an application for the Canary PENGU ETF to the US Securities and Exchange Commission (SEC), planning to launch an ETF that holds both the Fat Penguin NFT and the $PENGU token. According to the submitted plan, the ETF fund plans to hold 80-95% of the $PENGU tokens and 5-15% of the Pudgy Penguins NFT. As soon as this news came out, it sparked widespread discussion within the Fat Penguin community and the broader crypto market. Even Canary's avatar on social media is a Fat Penguin NFT.

Canary Capital, which was established only six months ago, has submitted multiple applications for altcoin ETFs. However, this practice has also raised many questions about how great the real demand for these altcoin ETFs is? Or is this more of a gimmick and marketing trick?

The news of PENGU ETF caused the price of the currency to rise and then fall. Will traditional investors enter the market?

After the announcement of the PENGU ETF, the price of $PENGU initially surged to $0.0075, up nearly 10%, reflecting the market's short-term optimism about the news. However, as of 7:30 pm on March 21, its price had fallen back to $0.0062, down 8.63% in 24 hours, showing that the market's enthusiasm for the news failed to sustain in the long term. Although the inflow of funds increased significantly after the announcement, with a 24-hour trading volume of $135 million, the price trend failed to maintain its strength.

The PENGU ETF submitted this time has caused some controversial voices within the Fat Penguin community. For example, Fat Penguin community user @beast_ico said that $PENGU ETF may be the most outrageous thing I have seen recently. We don’t even need an ETF for “ghost chains”, let alone a memecoin that is less than 6 months old. If those “Boomers” (traditional investors) are not interested in ETH (let alone SOL), why would they touch something called PENGU?

But digital artist @Tuteth_ said, "We are really going to die, brothers. I saw the hot discussions about $PENGU and Pudgy Penguin ETF, which is simply rubbish. Some of them are my friends. But you don't even realize that you are contributing to the 'tall poppy syndrome' (envy of successful people and suppression of leaders). Bitcoin was also ridiculed as the stupidest thing in the world. The meaning of staying in this circle is to enjoy these seemingly absurd but ultimately true possibilities because we have witnessed them happen. We have come all the way to today, but when we see this ETF, we say: 'Hey, this is over the line'? Think about it, your own avatar is an animal, and you chat about cryptocurrency with your friends online every day. All of this is absurd in the extreme - but you just draw a line here, it makes me laugh to death."

It can be seen that there are differences in the attitude of the Fat Penguin community towards this ETF application. Some opponents believe that this is an absurd hype, while supporters see it as an inevitable step in the evolution of NFT culture.

S-1 filing threshold is low? Canary Capital applies for copycat ETFs one after another

PANews once introduced the crypto investment company Canary Capital in October 2024, when it was only established for a month. The founder and CEO of Canary Capital is Steven McClurg, who is also the co-founder of Valkyrie Funds. It is worth mentioning that Justin Sun is also an investor in Valkyrie. In October 2021, Valkyrie was approved to launch the first batch of Bitcoin futures ETFs in the United States. Steven McClurg left Valkyrie Funds in August 2024 and founded the crypto investment company Canary Capital in September. On October 1, Canary Capital announced the launch of the first HBAR trust in the United States. Subsequently, Canary also applied for SUI ETF, ETF tracking the price of Axelar (AXL), Litecoin (LTC) ETF, AXL Trust, Solana ETF, and XRP ETF.

Some analysts pointed out that the low cost of submitting S-1 documents may be one of the reasons for the recent large number of applications for altcoin ETFs. According to analyst Jason Chen’s interpretation on March 7, “S-1 is the first step in registering an ETF, and what is the S-1 threshold for submitting an ETF? There are two hard thresholds. First, it needs to be a company registered in the United States that includes asset management and financial businesses. Second, it costs about US$100,000 to pay for the cost of drafting the S-1 document.”

Earlier on March 6, Canary Capital applied to the US SEC to launch an ETF tracking the cross-chain protocol Axelar. At that time, Chen Jian pointed out, "After Canary submitted the S-1 of AXL's ETF, AXL also rose. I know about the AXL project and have written two long articles before. The fundamentals are okay, but it is far from being qualified for ETF. The company that submitted the materials, Canary, was only established in September 2024, less than half a year ago. So a small company that was established for half a year submitted a coin that obviously did not meet the requirements of the ETF, and was reported by major media. Can you believe that there is no trick in this?"

Crypto KOL @qinbafrank recently expressed a similar view to Chen Jian: "In addition to the three largest mutual funds of BlackRock, Franklin, and Fidelity, there are also Bitwise, Grayscale, Ark and other fund companies that were first approved for BTC ETFs. If we see some unknown fund companies announce that they have submitted unknown altcoin ETFs to the SEC, there is no doubt that these fund companies are likely to receive advertising fees, and the main dealers behind them may take the opportunity to increase shipments."

SOL futures saw weak demand on the first day of listing, and small-cap currencies may find it difficult to maintain large demand

Meanwhile, Solana futures were traded for the first time on the Chicago Mercantile Exchange (CME) Group’s U.S. derivatives exchange on March 17, which is considered a key step in applying for a SOL spot ETF and a trial to test market demand.

But according to preliminary data on the CME website, on March 17, the first trading day of the contract, a notional value of about 98,250 SOL (about $12 million) of SOL futures changed hands on the exchange. This is a poor performance in early trading compared with major cryptocurrencies such as Bitcoin and Ethereum.

According to a report from research firm K33, the first day of trading for Solana futures saw total volume of $12.3 million and open interest of $7.8 million. This is in stark contrast to Bitcoin futures, which attracted $102.7 million in volume and $20.9 million in open interest when they debuted on the Chicago Mercantile Exchange in December 2017. Ethereum also fared better, with $31 million in volume and $20 million in open interest when its futures launched in February 2021.

K33 analysts Vetle Lunde and David Zimmerman attributed the tepid performance to broader market conditions, noting that Solana’s launch came during a period of low risk appetite and without a strong bull run or altcoin rally. “While Solana’s performance appears more reasonable when adjusted for market cap, its absolute numbers are well below previous futures listings,” the K33 report states.

Analysts added that despite the weak start, the listing does fit a pattern often associated with the eventual approval of a spot ETF. However, they warned that compared to the rally that Bitcoin would have sparked if a spot ETF was approved in early 2024, Solana’s lower trading activity suggests that any future ETF associated with the token could have a more modest impact on price.

In general, the discussion of PENGU ETF reflects a collision between NFT, memecoin culture and traditional finance, and community users also hold their own opinions. And Canary Capital's frequent applications for altcoin ETFs, is it an innovative attempt or a simple marketing method? The future of altcoin ETFs needs to be answered by the crypto market, users and regulators in the future.