Analyst Eric Balchunas said that exchange-traded funds must have a futures product live for at least six months, which Canary doesn’t seem to have for its TRUMP fund.
A new exchange-traded fund (ETF) for President Donald Trump’s memecoin could be coming to the U.S. after Canary Capital was first to file for a product that buys and holds the token, though questions have been raised by an analyst regarding how it might clear regulatory hurdles.
In a filing with the Securities and Exchange Commission on Tuesday, it was stated by Canary that its fund, the Canary Trump Coin ETF, would directly hold and offer exposure to Official Trump.
The token was launched by Trump in January, just days before he re-entered the White House. It’s currently ranked 55th by market value, having fallen 69% from its Jan. 19 all-time high of $46.50, the day before Trump’s inauguration, according to TradingView.
The token sparked controversy, with critics saying it could be used by anyone to anonymously buy influence with the president, and conflict-of-interest concerns were also raised, as Trump can direct crypto policy.
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Analyst Questions Whether a New ETF Will Pass Regulatory Hurdles
Additional paperwork must also be filed by Canary before its product can go through the SEC’s approval process, which usually takes almost a year.
On Tuesday, it was written on X by Bloomberg ETF analyst Eric Balchunas that he questioned whether the ETF “gets through,” as ETFs need to have a futures product on an exchange for at least six months.
“That doesn’t exist as far as I can see,” Balchunas said, but added that it could exist under the Investment Company Act of 1940, known as “40 Act” funds.
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Unlike other crypto ETFs where a Form S-1 and Form 19b-4 had to be submitted by issuers to register and inform the SEC, a 40 Act fund follows a different regulatory path, which is the same approach REX Shares used to bring its Solana SOL $204.77 staking ETF to market.
An ETF that tracks TRUMP under the 40 Act has also been filed for by REX, which would buy shares in an offshore company that holds the token.
The strategy was described as “a regulatory end-around” by ETF Store president Nate Geraci.
REX Boss Warns ETF Issuers About “Sketchy” Cryptocurrencies
Canary’s filing explained that it may not be an appropriate investment for shareholders who are not in a position to “accept more risk than may be involved with exchange-traded products that do not hold $Trump.”
The filing added, “The shares are speculative securities.”
This followed comments on Monday by REX Financial CEO Greg King, who warned that ETF issuers should be picky with what cryptocurrencies their funds track as the market “gets pretty sketchy below the top 10, certainly below the top 20.”
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The legal entity for the Trump coin ETF was established by Canary Capital with the Delaware State Department on Aug. 14.
