Canary Capital files S-1 registration statement with the Securities and Exchange Commission

Canary Capital filed an S-1 registration statement with the Securities and Exchange Commission late Wednesday in a bid to manage what could be the first spot Sei exchange-traded fund in the United States

Canary Capital has filed for an S-1 registration statement with the Securities and Exchange Commission for a new trust that will hold and track the price of Sei (SEI) in a U.S.-listed exchange-traded fund, according to a Wednesday filing.

The proposed fund, to be named the Canary Capital Trust: Avance Seiota ETF Trust, will offer direct exposure to the price of SEI, the native cryptocurrency of the Sei network, held in custody by BitGo and Coinbase, according to the filing. The Trust intends to actively manage a portion of its assets through one or more industry-leading infrastructure providers to participate in the Seiota network's staking activities, potentially generating additional yield for investors.

The fund will also process share creations and redemptions in cash rather than in-kind — mirroring the structure used by existing spot Bitcoin and Ethereum ETFs in the U.S., the filing adds.

The application for the Seiota ETF comes as the SEC is reviewing several other asset managers' applications for spot crypto ETFs. Bitwise, Grayscale, Franklin Templeton and REX Shares are also looking to get the SEC's green light for several spot crypto ETFs, including products focused on XRP, Solana, Dogecoin, Cardano, Avalanche, Hedera, Litecoin and Polkadot. The flurry comes amid a new era for the agency under the pro-crypto Trump administration, with expectations that it will offer a friendlier ear than in the previous Biden administration.

Earlier this month, the Sei Foundation launched the Sei Development Foundation to support the growth of the Sei protocol and advance crypto innovation in the U.S., highlighting the network's commitment to fostering a vibrant ecosystem.

Sei is an EVM-compatible Layer 1 blockchain built using the Cosmos SDK, offering fast execution and IBC support for cross-chain interoperability. It seeks to combine the development standard of Ethereum with the performance of Solana.

Canary has filed for a slew of crypto ETFs in recent weeks, including funds tied to Pengu, Sui, Hedera and Litecoin. Its most recent application for a spot Tron ETF also included a staking element.

SEI is currently trading up 8.6% over the past 24 hours at $0.23, according to The Block's crypto price index.

The SEC previously approved the listing of spot Bitcoin ETFs in January and spot Ethereum ETFs later in July when former Chair Gary Gensler led the SEC. However, that only came after a decisive court ruling brought on by ETF issuer Grayscale and the agency is yet to approve another spot crypto ETF.

Since Donald Trump became president in January, the SEC has shown an openness to the crypto industry through public crypto roundtables while also dropping several lawsuits against crypto firms, with the industry-friendly Paul Atkins recently taking over the role as Chair.

The SEC has not yet approved any crypto ETF products that include a staking component, in contrast to their Canadian and European counterparts. While spot Ethereum ETFs are already available in the U.S., these do not allow for the staking of any portion of the underlying assets.

On Wednesday, the Crypto Council for Innovation, together with 30 leading industry players including a16zcrypto, Consensys, Galaxy, Kraken, Lido, MoonPay and Paradigm, submitted a letter to the SEC's new Crypto Task Force. The letter, addressed to Task Force lead Commissioner Hester Peirce, highlighted the importance of clear guidance from the SEC on the regulatory treatment of staking and staking services under U.S. securities laws.

"We believe that this guidance is critical to enabling responsible innovation in the digital asset ecosystem," the letter stated.

The letter further emphasized that staking is a technical process integral to the operation of proof-of-stake blockchains, distinct from investment activities. It also highlighted the contributions of industry-leading infrastructure providers in supporting the Seiota network through their participation in staking services.

"We respectfully request that the SEC consider the unique nature of staking and provide the necessary clarity to support its responsible inclusion in exchange-traded products," the letter concluded.

The SEC is urged to clarify that staking and related services are not subject to U.S. federal securities law, the letter stated. It also calls for the SEC to support the responsible inclusion of staking features in exchange-traded products and avoid overly prescriptive rules that could freeze market structures and stifle staking innovation.