President Donald Trump’s memecoin may be on track to receive an exchange-traded fund (ETF) in the US, as Canary Capital has become the first to submit a proposal for a fund that will purchase and hold the token. However, an analyst is raising questions about how it might navigate regulatory challenges.
In a filing with the Securities and Exchange Commission on Tuesday, Canary announced its fund, the Canary Trump Coin ETF, which aims to directly hold and provide exposure to Official Trump (TRUMP).
Trump introduced the token in January, just prior to his return to the White House. It currently ranks 55th by market capitalization, having dropped 69% from its all-time high of $46.50 on January 19, the day before Trump’s inauguration, according to TradingView.
The token has generated controversy, with critics arguing it allows individuals to anonymously influence the president and raises concerns regarding conflicts of interest, since Trump can shape crypto policy.
Analyst questions if ETF “gets through”
Canary must also submit additional documentation before its product can enter the SEC’s standard approval process, which typically lasts nearly a year.
Bloomberg ETF analyst Eric Balchunas tweeted on Tuesday that he wonders if the ETF will “get through,” as ETFs are required to have a futures product listed on an exchange for a minimum of six months.
“That doesn’t exist as far as I can see,” Balchunas commented, but noted that it could potentially be established under the Investment Company Act of 1940, also known as “40 Act” funds.
Unlike other crypto ETFs where issuers were required to file Form S-1 and Form 19b-4 to register and notify the SEC, a 40 Act fund utilizes a different regulatory avenue, which is the same method REX Shares used to launch its Solana (SOL) staking ETF.
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REX has also applied for an ETF that tracks TRUMP under the 40 Act, intending to purchase shares in an offshore company that owns the token.
ETF Store president Nate Geraci described the approach as “a regulatory end-around.”
REX boss warns ETF issuers of “pretty sketchy” cryptocurrencies
Canary’s filing stated that it may not be suitable for investors who cannot “accept more risk than may be involved with exchange-traded products that do not hold $Trump.”
“The shares are speculative securities,” the filing clarified.
This comes after REX Financial CEO Greg King cautioned ETF issuers on Monday to carefully select the cryptocurrencies their funds track, as the market “gets pretty sketchy below the top 10, certainly below the top 20.”
Canary Capital established the legal entity for the Trump coin ETF with the Delaware State Department on August 14.
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