In a groundbreaking move that signals the potential mainstreaming of non-fungible tokens (NFTs), Canary Capital has filed with the Securities and Exchange Commission (SEC) to create the initial-ever exchange-traded fund (ETF) holding both a cryptocurrency and digital collectibles. The S-1 form, submitted on March 20, 2025, outlines a novel investment vehicle primarily composed of PENGU tokens and Pudgy Penguins NFTs, alongside ETH and SOL holdings to facilitate transactions within these ecosystems.
Market reaction to the announcement was immediately apparent, with PENGU tokens surging over 7% and the floor price of Pudgy Penguins NFTs experiencing a notable uptick, though these gains proved somewhat ephemeral as volatility persisted. This filing follows Canary’s established pattern of unconventional crypto ETFs, including previous submissions for HBAR, AXL, and SUI funds. The ETF represents an unprecedented regulatory proposition, testing both the SEC’s flexibility toward digital collectibles and institutional appetite for alternative crypto assets beyond Bitcoin and Ethereum, which have already secured ETF approval pathways.
Market volatility tempered initial enthusiasm, as the groundbreaking NFT-crypto ETF proposal challenges regulatory boundaries beyond established Bitcoin and Ethereum frameworks.
Pudgy Penguins, launched on Ethereum in July 2021, comprises 8,888 unique digital collectibles with current market listings ranging from 9.86 ETH to as high as 9,000 ETH for the most desirable specimens. The collection has achieved mainstream recognition through partnerships with WME talent agency and retail distribution via Walmart, factors potentially enhancing its credibility for institutional investment consideration. Following the ETF announcement, the collection saw renewed interest with floor prices rising above 10 ETH.
The PENGU token, operating on Solana since December 2024, initiated with approximately $2.8 billion market capitalization, distributing 25.9% of its supply through airdrops to NFT holders and community members. Despite listing on major exchanges including Binance and Bybit, the token has experienced significant price retraction from its $0.0428 peak. The token’s validation mechanism resembles mining processes used in traditional cryptocurrencies, though with significantly lower energy requirements.
Financial analysts remain divided on long-term prospects for such specialized crypto funds, particularly given the broader uncertainty surrounding smaller digital assets in regulated investment vehicles.
However, the SEC’s reportedly softening stance under new leadership provides cautious optimism that regulatory hurdles might prove surmountable, potentially accelerating NFT integration into mainstream financial instruments and establishing precedent for future digital asset ETFs.
