Canary Capital CEO Steven McClurg said the company’s recent “ready-to-use” crypto exchange trading fund (ETF) submission is a calculated approach to engaging assets with potential and unmet demand.
In a recent interview with Encryption, McClurg explained the rationale behind the company’s submissions, from the first Litecoin (LTC) ETF to the first fund, to be exposed to the US’s mysterious token (NFT) collection.
He explained:
“If you’re a big store like BlackRock, you can afford to take the chance. If you’re a small store like us, we don’t do anything unless we really feel we can actually accomplish that.”
First Litecoin filing
October 16th, Canary Capital I submitted the S-1 form Unlike the trends in filing Spot Solana (SOL) and XRP ETFs by other companies at the time, we list the first Spot Litecoin ETFs.
McClurg explained that the decision came after Canary realized that former Securities and Exchange Commission Chairman Gary Gensler had appointed Bitcoin (BTC), Ethereum (ETH) and Litecoin as non-security.
He added:
“The SEC had previously approved the Bitcoin and Ethereum ETFs, so we saw a few people submitting their files to Solana, so we decided to consider the opportunity they believed could have been approved under the old administration.
Additionally, McClurg said the company at the time believed that the LTC token distribution model was not classified as a securities offering and was strengthening its decision to file an ETF.
Outlier submission
Canary, less than a month has passed since submitting his first Litecoin ETF and branching out from the trend on November 12th. I submitted my first spot hedera (hbar)etf.
Analysts were surprised by the decision as HBAR is not part of the 20 largest cryptocurrencies by market capitalization. Additionally, Hedera has only $1111 million in total locked on the network as of March 27th. This is much lower than the main layer 1 blockchain.
McClurg said he applied for the ETF as Canary identified HBAR as a sound token with demand that was not under the radar of other ETF publishers. He added that the company’s goal is to find such opportunities before they become a trend in the industry. In his words:
“We want to find opportunities to exist a year or two from now, because if we get faster at punching, we get those flows when others are taking the files.”
McClurg also said Canary, like LTC, is unlikely to be classified as security, and believes that submissions will “good” under the previous SEC regime.
HBAR prices skyrocketed around 470% within a month of ETF filing, jumping from $0.065 to $0.368 on December 6, 2024, waiving some of their profits amid the recent market slump.
HBAR was trading at $0.192 at the time of reporting, but it rose nearly 200% since the canary submission last November.
Early Bets on Unrecognized Infrastructure
Another move in the canary Branches from the main trends I applied for the Spot Axelar (Axl) ETF on March 5th.
The filing follows a similar paper on preemptive positioning, which shocks the crypto market as Axl is not among the top 100 cryptocurrencies by market capitalization.
McClurg said Axelar has received little mainstream attention, but is widely integrated into the developer environment and protocol infrastructure.
He added:
“I was in Esten, I was in several other places and I started talking to the protocol. Everything about them is working with Axel behind the scenes.
He points out that Axelar appears to be running more effectively, contrasting with previous visual projects like Polkadot (DOT).
This future-looking approach extends to the company’s views on the broader ETF landscape. Canary is also the first issuer to submit to SUI ETF, the 18th largest crypto by market capitalization, and the eighth largest blockchain by total locked value in decentralized applications.
McClurg criticized the common response strategy among ETF publishers. This tends to follow a trend already underway. He said the Canary model instead. It focuses on early identification of demand and product development, with the aim of changing investors’ focus.
Incorporating NFTs into ETF structures
Canary also applied for an ETF associated with the Pudgy Penguins NFT collection. McClurg refused to elaborate on the filing, but provided context for the company’s thinking about NFT-based investment products.
He highlighted his background in intellectual property investment, from art to entertainment rights, and highlighted a shift in regulatory stance that opened the door to tokenized digital collectibles.
Following an official statement from SEC officials indicating that NFTs and Memecoin are not classified as securities, Canary saw a viable path to implementing NFT-based ETFs.
The company chose stocky penguins over other collections, such as boring apes and crypto plants, for IP expansion beyond digital ownership, such as physical goods and media content.
McClurg emphasized that although he has never held NFT personally, the structure of Pudgy Penguins has made it a more viable brand in terms of liquidity and IP.
“[Pudgy Penguins]did a better job developing their brand and IP.”
He added that this expansion into retail and animation supports the inclusion of assets into regulated investment instruments. ”
Timeline for approval
As a co-founder of Asset Manager Valkyrie, McClurg worked on the company’s Bitcoin ETF. He said the experience has made him more cautious about the timeline of the Altcoin ETF, and he is hesitant to make solid predictions.
However, McClurg said he would not be surprised if up to four single tokens, Altcoin ETF, were approved this year, given the improved regulatory environment under the SEC’s new leadership.
He concluded:
“I think a lot of them will probably get approved next year.”
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