Canary Capital Delivers a Bold Move with First-Ever SEI ETF Proposal

The American asset management company, Canary Capital, has officially applied to the US Securities and Exchange Commission (SEC) for a spot SEI ETF. This application is notable for including a staking component, marking a first in the industry. The fund aims to provide direct exposure to the SEI altcoin ‘s price, with a portion of the assets staked to offer additional returns to investors. The fund’s asset custody will be handled by Coinbase and BitGo.

SEI ETF Sets Itself Apart with Staking Support

According to information in the S-1 form submitted by Canary Capital to the SEC, the goal of the fund is to track SEI’s spot price while functioning similarly to a traditional exchange-traded fund structure. A distinct feature is the aim to derive potential returns from staked SEI assets. All share creation and redemption transactions will be conducted in cash. This structure bears similarity to the spot Bitcoin $97,057 and Ethereum $1,856 ETFs currently traded in the U.S.

SEI stands out as a Layer-1 Blockchain built with the Cosmos SDK and compatible with EVM. This network aspires to combine Ethereum’s developer standards with speeds akin to Solana $152 ‘s. The integration of cross-chain interactions via IBC has been attracting increasing attention. Following this news, SEI’s price rose by 8.6% in the last 24 hours, reaching $0.23.

Recently, Canary Capital has also applied for ETFs for projects such as Pengu, Sui, Hedera, and Litecoin. A similar staking component was featured in the company’s recent spot Tron ETF application. This strategy highlights the company’s desire to integrate staking mechanisms into institutional investment products.

SEC Faces Calls for Clarity on Staking

While the SEC’s approach to cryptocurrency ETFs that include staking remains unclear, pressures within the industry are mounting. Despite the approval of spot Ethereum ETFs, these products do not permit the staking of user funds. Meanwhile, ETF products with staking features have been actively traded in regions like Canada and Europe, indicating the more restrictive regulatory stance of the US market.

Recently, a group of 30 industry leaders, including companies like a16zcrypto, Consensys, Galaxy, Kraken, Lido, MoonPay, and Paradigm, sent a letter to the SEC’s newly established Crypto Task Force. Addressed to SEC member Hester Peirce, the letter argues that staking processes are technical and should not be classified as securities transactions.

The letter also called for responsible inclusion of staking components in ETFs and urged a move away from overly regulatory approaches that could stifle staking activities. The industry insists on staking becoming part of innovative products in the U.S. Expectations for progress in this area have risen, especially given the perceived pro-cryptocurrency stance of the new SEC chair, Paul Atkins.