Canary Capital didn’t even exist when the spot bitcoin or even the spot Ethereum exchange-traded funds launched last year. Yet, this fledgling firm has quickly carved out a niche for itself within the competitive landscape of cryptocurrency finance.
Founded in October of last year, Canary Capital has aggressively pushed forth several applications for crypto ETFs, incorporating notable cryptocurrencies such as Solana (SOL), XRP (XRP), Litecoin (LTC), and Hedera (HBAR). Impressively, the latter two ETFs represent the first applications of their kind in the industry.
At first glance, it appears that the company had everything meticulously planned. However, Steve McClurg, the founder and CEO of Canary Capital, provided insight into their journey, stating, “We really had no idea that we would be getting back into the ETF game.”
McClurg is no stranger to the financial world; he co-founded Valkyrie Investments, an alternative asset manager, which was acquired by CoinShares in March 2024. After spending approximately six months at CoinShares, McClurg launched Canary Capital, a hedge fund concept he developed during his tenure at Valkyrie.
Reflecting on the pivotal moment for his new venture, McClurg recounted a significant event: “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.” This led to discussions about the potential changes in regulatory agencies and the likelihood of other crypto ETFs gaining approval. Consequently, they decided to file for ETFs, exploring opportunities within the market.
With the successful launches of spot bitcoin and Ethereum ETFs, Canary opted not to pursue these assets. Instead, they focused on promising tokens that they assessed were unlikely to be classified as securities, ultimately settling on LTC, HBAR, and XRP. The decision regarding XRP was particularly notable, driven by the speculation that it would be deemed a non-security in an ongoing court case—a prediction that later proved accurate.
As of now, no applications from Canary Capital have received approval from the Securities and Exchange Commission (SEC). However, several preliminary applications for Solana ETFs faced challenges under previous SEC leadership in 2024. Following Trump’s inauguration, the Cboe BZX Exchange refiled the necessary documents, seeking approval under the new administration. The SEC is bound to respond to these submissions within 45 days, or take up to 240 days if delays occur.
Additionally, Canary has filed a 19b-4 for its proposed Litecoin ETF, with an expected SEC response due by February 29. Notably, there have been no 19b-4 filings yet for the XRP and HBAR offerings. While an S-1 filing represents an initial step towards launching an ETF, it requires the subsequent submission of a 19b-4 to inform the SEC regarding a proposed rule change by a registered self-regulatory organization, like an exchange.
In retrospect, McClurg has characterized Canary’s endeavors as a speculative bet—essentially a call option on Trump’s potential return to the presidency. “Oddly enough, it worked,” he remarked, showcasing a blend of strategic foresight and serendipity.
Looking ahead, while the firm does not currently anticipate launching additional ETFs, McClurg remains open to exploring potential opportunities with other tokens in the future. As the crypto landscape continues to evolve, Canary Capital stands poised as a noteworthy candidate for the next wave of market innovation.
