Canary Capital Files ETF for People Who Really, Really Like Pudgy Penguins (and Volatility)

Canary Capital has submitted a filing to the United States Securities and Exchange Commission (SEC) for the creation of an exchange-traded fund (ETF) that will track PENGU, the governance token for the Pudgy Penguin ecosystem.

The ETF would also include Pudgy Penguin NFTs and other digital assets like Solana and Ethereum to facilitate transactions, marking the first ETF to incorporate NFTs alongside cryptocurrencies.

Submitted on March 20, the S-1 form outlines plans for the ETF to operate as a trust, holding between 80% to 95% PENGU tokens and 5% to 15% NFTs. According to the S-1 filing, Canary Capital plans to evaluate NFTs for the ETF based on factors like price, rarity, desirability, and overall collection value.

The filing comes just days after Canary Capital announced that it applied for regulatory approval to launch an ETF tied to the spot price of Sui, a cryptocurrency associated with Sui Network.

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Comprising 8,888 unique NFTs, the Pudgy Penguins collection saw its floor price surpass $100,000 for the first time by achieving a new all-time high of 34 ETH (approximately $104,600) in December 2024. However, its price has cratered to 9.74 ETH since.

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The PENGU token launched on the Solana blockchain in December 2024, distributing 25.9% of its 88.89 billion supply via an airdrop to NFT holders, with allocations based on the rarity of the NFTs. The token debuted with a market capitalization of approximately $2.8 billion and is currently traded on exchanges like Binance, Bybit, and OKX.

PENGU's price has also been volatile. Despite being up almost 30% over the year, its value is down 85% from its January highs.

Pudgy Penguins parent company, Igloo, expressed support for the proposed ETF, stating, "We are ecstatic to have both $PENGU and Pudgy Penguins included in this new and innovative filing aimed at pushing the boundaries of crypto and ETFs."

"We believe that Pudgy Penguins is the face of crypto, representing innovation and the mass adoption of blockchain technology," the statement said.

Pudgy Penguins holders have come out in their masses to support the ETF too. "$PENGU & Pudgy Penguin NFT ETF. First of its kind. History," stated one fan. "$PENGU and Pudgy Penguins NFT ETF. The world will embrace Pengu," said another.

However, the NFT market is no longer the once-thriving environment it used to be. As reported by Decrypt, "The NFT market suffered a dismal 2024, with trading volumes and sales counts dropping to their weakest levels since 2020. Annual trading volumes fell by 19%, while sales counts dipped by 18% compared to 2023, according to a report by blockchain analytics platform."

At a time when "rugpulls" have become more synonymous with NFTs than "utility," it's hard to comprehend the value of an NFT-based ETF unless you're a Pudgy fan, of which there are less than 5,000 holders according to Dune.