Canary Capital: A New Player in the Crypto ETF Space
Canary Capital emerged as a notable entity in the cryptocurrency exchange-traded fund (ETF) landscape, despite having been founded just last October, long after the launch of spot bitcoin and spot Ethereum ETFs. In a remarkably short period, the firm has made significant strides by submitting multiple applications for crypto ETFs, targeting assets such as Solana (SOL), XRP (XRP), Litecoin (LTC), and Hedera (HBAR). Notably, the applications for LTC and HBAR mark the first of their kind in the ETF sector.
From an outsider’s perspective, it may appear that Canary Capital had meticulously orchestrated its entry into the ETF arena. However, Steve McClurg, the founder and CEO of the firm, admitted, “We really had no idea that we would be getting back into the ETF game.” McClurg’s name may ring a bell for some; he previously co-founded Valkyrie Investments, where he served as the chief investment officer. Valkyrie was acquired by CoinShares in March 2024, shortly after which McClurg transitioned to start Canary Capital as a hedge fund, a concept he had been nurturing during his tenure at Valkyrie.
McClurg recounted a pivotal moment that influenced their strategy: “Essentially what happened was […] there was an assassination attempt on Trump, the markets rallied around it, politics rallied around it, and we started thinking, well, he could actually win.” He elaborated on the implications of a potential Trump victory, suggesting it could lead to significant shifts in regulatory agencies and increase the likelihood of other crypto ETFs gaining approval. This encouraged them to file for several ETFs and observe the outcome.
With the successful launch and positive reception of spot bitcoin and Ethereum ETFs, Canary Capital strategically opted to bypass these popular assets. Instead, they directed their focus toward lesser-known tokens within the top 20 by market capitalization, specifically selecting those they believed to be non-securities. This led to their decision to file for ETFs based on LTC, HBAR, and XRP, with the XRP submission stemming from the anticipation that it would be classified as a non-security following a favorable court ruling—and indeed, it was.
As of now, none of Canary Capital’s applications have secured approval from the Securities and Exchange Commission (SEC). It’s worth noting that several applications for Solana ETFs were previously denied or went unacknowledged by the SEC under the past leadership in 2024. However, following Trump’s inauguration, the Cboe BZX Exchange took the initiative to resubmit 19b-4 documents for the SOL ETFs, hoping for a more favorable outcome under the new administration. The SEC is obligated to respond to these new submissions within 45 days, or if there’s an official delay, within 240 days.
In addition to the Solana ETF, Canary has also submitted a 19b-4 for its Litecoin ETF, which is expected to receive feedback from the SEC by February 29. However, they have not yet filed 19b-4s for their XRP and HBAR ETFs. While an S-1 filing is a preliminary step toward launching an ETF, it remains inactive until followed by a 19b-4, which is necessary to notify the SEC about a proposed rule change from a self-regulatory organization, such as an exchange.
McClurg characterized Canary’s ambitious efforts as a “call option on Trump winning the presidency.” Looking ahead, he mentioned that while the firm currently does not have immediate plans to launch additional ETFs, they remain open to exploring opportunities with other tokens in the future.
