Canary Capital has filed an innovative proposal with the U.S. Securities and Exchange Commission (SEC). This proposal marks the first time an exchange-traded fund (ETF) has included the staking features of Tron (TRX). The proposal would be the first of its kind filed against TRX. Canary Staked TRX ETF gives investors an opportunity to profit from TRX price movements. It helps them to earn staking rewards!

The filing comes in as the SEC still seems to be figuring out how staking fits into the world of regulated financial products. The SEC has long fought against the inclusion of staking in crypto exchange-traded products (ETPs). This has made staking within US-listed crypto ETFs a hot button regulatory topic.

Regulatory Hurdles and Industry Response

These issues aren’t theoretical. The SEC has put forth a number of objections to bringing staking into regulated financial products. Staking is core to security and operation of all Proof-of-Stake (PoS) networks, including Ethereum and Tron. And yet, for reasons that are still unclear, the SEC has dragged its feet on deciding on two pivotal rule changes to allow for crypto ETPs. Among these delays is the Grayscale Ethereum Trust’s application to be allowed to stake a portion of its holdings. Final decisions on these rule changes are now anticipated by June 2025.

In February, Senator Cynthia Lummis and four other US senators tried to rein in these tensions in a letter to the SEC. They asked for an explanation for the omission of staking. Currently, they stated, US asset managers are at a disadvantage under the current policy. They argue that international rivals in Canada, Europe, and the United Kingdom have a serious competitive advantage.

Industry representatives were surprised to be invited to meet with the SEC’s new Crypto Task Force on Feb. 5. Throughout the meeting, they brought forth specific models to answer the SEC’s concerns. We saw a lot of innovation with these models, including utilizing third-party services for staking or offering liquid staking tokens.

The Significance of Staking

Staking provides an opportunity for cryptocurrency holders to commit a portion of their assets. This is one way to help incentivize the continued operation of a blockchain network. In exchange, they earn rewards for doing this deed, usually consisting of more tokens. For PoS networks such as Ethereum (ETH) and Tron, staking is fundamental for ensuring the network’s security and validating transactions.

A staked TRX ETF might just be the bridge connecting traditional finance with the rapidly evolving crypto universe. For FDUSD, it provides a safe and regulated means for investors to earn staking rewards. The SEC’s position on staking presents an enormous challenge.

Future Outlook

The SEC's ongoing deliberations about staking's role in crypto ETPs highlight the broader regulatory uncertainty surrounding digital assets in the United States. The crypto investment product demand is through the roof. The bad news is that the SEC now finds itself under increasing pressure to establish uniform standards that foster innovation while protecting investors. Approval of the Canary Staked TRX ETF would establish a precedent. This would clear a path for future crypto investment products with staking capabilities.