The PENGU Spot ETF: The First NFT-Based Cryptocurrency Exchange-Traded Fund

January 2024 marked a pivotal point in the crypto industry: the US Securities and Exchange Commission (SEC) approved a bunch of Bitcoin (BTC) Spot exchange-traded funds (ETFs)

January 2024 saw a pivotal moment in the crypto industry: the US Securities and Exchange Commission (SEC) approved a batch of Bitcoin (BTC) Spot exchange-traded funds (ETFs) after a decade of resisting them. Later that year, several Ethereum (ETH) Spot ETFs were also approved. These early successes encouraged investment funds focused on digital assets to seek approvals for other altcoins, with ETF applications for Dogecoin (DOGE),Polkdot (DOT), Solana (SOL),Avalanche (AVAX) and other high-cap cryptos ending up on the SEC's desk in recent months.

However, until March 20, 2025, one type of crypto ETF application had never been submitted — an NFT-based crypto ETF product. Such a move would have seemed nearly impossible given how stringently and at length the SEC evaluated ETF applications even for well-established fungible cryptos. And yet, the Canary Capital investment manager submitted an application to the SEC for approval of the first NFT-focused crypto ETF product, the PENGU Spot ETF, sparking a mini-revolution in the emerging space at the junction of crypto and traditional finance.

If approved, this ETF will be the first of its kind in the industry and will be based on a mix of PENGU tokens and Pudgy Penguins NFTs. Many observers expect that Canary Capital will face an uphill battle to get the SEC's endorsement for this groundbreaking product. Nevertheless, the SEC now has a track record of approving crypto ETFs — which raises hopes for both the altcoin ETFs mentioned above and the PENGU Spot ETF application.

What is the PENGU Spot ETF?

The Pengu Spot ETF is a proposed exchange-traded fund (ETF) product introduced by the Canary Capital investment management firm, and is currently awaiting approval by the SEC.Canary Capital submitted the application on March 20, 2025, making this the first crypto ETF product with an NFT component that’s vying for the approval of America’s primary financial regulator. The ETF has been registered in the US state of Delaware.

The Pengu Spot ETF's portfolio is envisioned as consisting primarily of PENGU tokens that will make up anywhere between 80% and 95% of total assets held, with the rest allocated to Pudgy Penguins NFTs. Small portions of Solana's SOL coins and Ethereum's ETH tokens will also be included in order to facilitate transactions and liquidity support, as PENGU tokens are mainly issued on the Solana blockchain, and Pudgy Penguins NFTs are an Ethereum-based collection.

Since Canary Capital will be holding these assets and periodically rebalancing the portfolio, gas fee payments on Solana and Ethereum will apply, with fees paid in SOL and ETH, respectively.

Launched in 2021 on Solana, the Pudgy Penguins NFT collection consists of 8,888 items, each depicting a cute penguin with a distinct combination of five different traits. In December 2024, the project introduced a related fungible cryptocurrency, the Ethereum-based PENGU token. As of April 2, 2025, PENGU is a smaller-cap asset, ranked 191st in the crypto market, with a total market cap of $319 million. In contrast, Pudgy Penguins are among the leading projects in the NFT space, ranked second among all NFT collections, with a market cap of $155 million.

Source: dappradar.com

Canary Capital's application to the SEC is unique in two ways: it’s the first instance of an NFT-based ETF product submitted for approval to the SEC, and it marks the first time ETF approval has been sought for a relatively smaller-cap cryptocurrency, PENGU, which isn’t even among the top 100 crypto assets by market cap. All of the other crypto ETF applications approved by the SEC (or currently vying for approval) are based on high-cap, leading assets that are typically ranked within the top 30.

Current landscape of the PENGU Spot ETF

As of April 2, 2025, the SEC has had the application for the PENGU Spot ETF in hand for just two weeks. The regulator has up to 240 days to review such applications, although historically, the SEC has pondered over crypto ETF applications for years. Now, however, the string of Bitcoin and Ethereum Spot ETF approvals in 2024 raises hopes that newer submissions may be subject to an already established evaluation framework — and thus greenlighted much faster.

At the moment, the SEC is also considering spot ETF applications for several high-cap cryptocurrencies, including Dogecoin,Solana,Polkdot, Litecoin (LTC) and XRP (XRP). If the regulator decides to approve the applications in batch mode — all or several at once — Canary Capital will have reason to hope that its ETF is included.

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