ETF analyst questions how Canary’s TRUMP fund ‘gets through’

President Donald Trump’s memecoin could be getting an exchange-traded fund (ETF) in the US after Canary Capital was first to file for a product that buys and holds the token, with an analyst questioning how it will clear regulatory hurdles.

In a filing with the Securities and Exchange Commission on Tuesday, Canary said its fund, the Canary Trump Coin ETF, would directly hold and offer exposure to Official Trump (TRUMP).

Trump launched the token 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 the token could be used by anyone to anonymously buy influence with the president and raises conflict of interest concerns, as Trump can direct crypto policy.

Analyst questions if ETF “gets through”

Canary must also file additional paperwork before its product can go through the SEC’s usual approval process, which usually takes nearly a year.

Bloomberg ETF analyst Eric Balchunas wrote to X on Tuesday that he questions 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.

Unlike other crypto ETFs where issuers had to submit a Form S-1 and Form 19b-4 to register and inform the SEC, a 40 Act fund follows a different regulatory path, and is the same approach REX Shares used to bring its Solana (SOL) staking ETF to market.

REX has also filed for an ETF that tracks TRUMP under the 40 Act, which would buy shares in an offshore company that holds the token.

ETF Store president Nate Geraci described the strategy as “a regulatory end-around.”

REX boss warns ETF issuers of “pretty 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 shares are speculative securities,” the filing added. 

It follows comments on Monday from REX Financial CEO Greg King, who warned ETF issuers to be picky with what cryptocurrencies their funds track as the market “gets pretty sketchy below the top 10, certainly below the top 20.”

Canary Capital established the legal entity for the Trump coin ETF with the Delaware State Department on Aug. 14.