President Donald Trump’s memecoin might see an exchange-traded fund (ETF) launched in the US, as Canary Capital has taken the lead in filing for a product that aims to purchase and hold the token, although an analyst has raised concerns about potential regulatory challenges.
In a filing made to the Securities and Exchange Commission on Tuesday, Canary announced its fund, the Canary Trump Coin ETF, will directly hold and provide exposure to Official Trump (TRUMP).
Launched in January, just before Trump returned to the White House, the token currently ranks 55th by market value, having decreased by 69% since 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 claiming it could facilitate anonymous influence-buying with the president and raises concerns about conflicts of interest, given Trump’s capability to steer crypto policy.
Analyst questions ETF’s viability
Canary is required to submit further documentation before its product undergoes the SEC’s standard approval procedure, which typically spans nearly a year.
Bloomberg ETF analyst Eric Balchunas commented on X on Tuesday, casting doubt on whether the ETF “gets through,” as ETFs must have a futures product on an exchange for at least six months.
“That doesn’t exist as far as I can see,” Balchunas remarked, while noting that it might be feasible under the Investment Company Act of 1940, referred to as “40 Act” funds.
Unlike typical crypto ETFs that require issuers to submit a Form S-1 and Form 19b-4 to register with the SEC, a 40 Act fund utilizes a different regulatory avenue, similar to the method REX Shares employed to launch its Solana (SOL) staking ETF.
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REX has also filed for an ETF that tracks TRUMP under the 40 Act, which aims to purchase shares in an offshore entity that holds the token.
ETF Store president Nate Geraci described this strategy as “a regulatory end-around.”
REX CEO warns about “sketchy” cryptocurrencies
Canary’s filing indicated that the investment may not be suitable for shareholders unable to “accept more risk than what may be associated with exchange-traded products that do not hold $Trump.”
“The shares are speculative securities,” the filing cautioned.
This follows remarks made on Monday by REX Financial CEO Greg King, who advised ETF issuers to be discerning about which cryptocurrencies their funds track, noting that the market can get “pretty sketchy” beyond the top 10, particularly 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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