Are altcoin ETFs just a marketing ploy? Canary Capital’s PENGU ETF filing controversy

Last Thursday, US-based asset manager Canary Capital filed an application with the Securities and Exchange Commission (SEC) for the Canary PENGU exchange-traded fund (ETF), a fund designed to hold both Pudgy Penguins NFTs and the PENGU token. However, the crypto community is asking if listing ETFs from NFT projects is feasible.

According to the filing, 80-95% of the ETF’s holdings would consist of PENGU, with 5-15% allocated to Pudgy Penguins NFTs.

The announcement immediately started chatter across social media platforms within the Pudgy Penguins community, who questioned whether the move was a legitimate financial product or a marketing stint, especially given that Canary Capital’s social media profile picture features a Pudgy Penguin NFT.

Does crypto need a Pudgy Penguin ETF?

After the PENGU ETF announcement, the token’s price initially surged nearly 10% to $0.0075. However, towards the end of March 21 business hours, it had dropped to $0.0062, an 8.63% decline over 24 hours. Trading volume spiked to $135 million within the same period, but the token failed to maintain its gains.

Gensler watching $Pengu's ETF pic.twitter.com/480QCYqqvc

— Dan (@0xflux_) March 20, 2025

The filing caused mixed reactions in the crypto community, with some investors coining the ETF as unnecessary. 

“A $PENGU ETF might be the dumbest thing I’ve seen lately. We don’t even need ETFs for ‘ghost chains,’ let alone a memecoin under six months old. If ‘boomers’ aren’t even into ETH or SOL, why would they touch something called PENGU?” argued one X user.

Bloomberg’s Senior ETF Analyst, Eric Balchunas, was also baffled by the filing, commenting, “This is the Second ETF filing this week that I had to Google. Pudgy Penguins?” 

Another Ethereum analyst shared PENGU’s price chart in his post, which showed the token’s price downtick in the last four months. “An ETF of an asset that is based on cartoon JPEGs and is down 90% in four months. Ya, that makes sense,” he reckoned.

An ETF of an asset that is based of cartoon jpegs and is down 90% in 4 months. Ya that makes sense. pic.twitter.com/pZu84jJx1v

— ₿rett (@brett_eth) March 21, 2025

Crypto influencer CryptoRexy told his followers that a PENGU ETF looked less like “innovation and more like a clout-chasing spree.” 

“Filing for a PENGU ETF just screams, ‘Let’s see what sticks.’ The low filing cost explains the flood, but actual approval? That’s a whole different story.” CryptoRexy propounded.

Is the bar too low for ETF filings?

The surge in altcoin crypto ETF applications has raised questions about whether firms are exploiting the SEC filing process for publicity. The financial regulator, under the Trump administration, is now more supportive of digital currencies. 

According to researcher Jason Chen, the cost of submitting an S-1 filing is relatively low. “The only hard requirements are being a US-registered financial firm and spending around $100K to draft the S-1. That’s it,” Chen wrote in a public note on March 7.

Earlier this year, Canary Capital also filed for an AXL-tracking ETF, which some analysts viewed as an attempt to manipulate market sentiment. “AXL’s price pumped after the news, but let’s be real—it’s nowhere near ETF-worthy. Canary itself is a six-month-old startup. The timing of this media frenzy reeks of manipulation,” Chen wrote.

Canary Capital pushes for more altcoin ETFs

The PENGU ETF is not Canary Capital’s first venture into crypto ETF filings. In recent months, the firm has submitted proposals for funds tied to Solana (SOL), XRP, and other digital assets. While none have received regulatory approval, the filings have often coincided with brief price surges in the associated tokens.

About a week ago, Canary Capital made public its plans for a SUI ETF just days after Trump-affiliated decentralized finance (DeFi) platform World Liberty Financial (WLFI) stated that it would add Sui assets to its token reserve and explore related product development. 

Following this news, SUI’s price has jumped to $2.43. Although the token is up 41.96% over the past year, it has dropped by approximately 27% in the past month.

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