Lucía Peña
In a move that could mark a first in the U.S. ETF landscape, Canary Capital has filed a registration with the Securities and Exchange Commission (SEC) to launch a spot Sei (SEI) exchange-traded fund featuring a staking component — a structure not yet approved for any crypto ETF in the country.
According to the S-1 filing submitted late Wednesday, the ETF aims to offer direct price exposure to SEI, the native asset of the Sei blockchain, with custody services provided by Coinbase and BitGo. Unlike traditional ETFs that operate on a strictly passive model, this fund intends to stake part of its SEI holdings, offering the potential for additional yield.
The ETF will follow a cash-based creation and redemption process, similar to the frameworks used by spot Bitcoin and Ethereum ETFs that launched earlier in 2024. This model avoids the complexities of in-kind transfers and could help align the fund with regulatory expectations.
What Is Sei? A Cross-Chain Layer 1 Combining Speed and Compatibility
Sei is a high-performance, Layer 1 blockchain built with the Cosmos SDK. It’s fully EVM-compatible and supports Inter-Blockchain Communication (IBC), allowing seamless interoperability with other chains. Sei’s architecture is designed to deliver Solana-level transaction speeds while maintaining Ethereum’s smart contract standards.
The Sei ETF filing follows a series of recent proposals by Canary Capital, which has also submitted applications for ETFs tied to Tron, Sui, Hedera, Litecoin, and even niche tokens like Pengu. Its Tron ETF filing also featured a staking element, suggesting a broader strategic direction toward yield-generating crypto investment products.
Earlier this month, the Sei Foundation launched the Sei Development Foundation, tasked with supporting the protocol’s growth and promoting broader crypto adoption in the U.S..
“ETFs serve as a vital on-ramp for mainstream access to crypto, bridging institutional-grade performance with broader market availability,” said Justin Barlow, Executive Director of the Sei Development Foundation.
Solana and XRP ETFs Lead the Race for Approval
Canary is not alone in pursuing spot crypto ETFs. Major asset managers including Grayscale, Bitwise, Franklin Templeton, and REX Shares have lined up ETF proposals for assets like XRP, Solana, Dogecoin, Cardano, Hedera, and Polkadot.
According to Bloomberg ETF analysts Eric Balchunas and James Seyffart, Solana and Litecoin ETFs currently have the highest approval odds (90%), followed closely by XRP (85%) and Dogecoin and Hedera (80%). Cardano, Avalanche, and Polkadot ETFs trail with a 75% probability.
Changing Political Winds at the SEC Benefit Crypto Outlook
Since Donald Trump’s return to the presidency in January, the SEC has softened its approach to the crypto industry, holding public roundtables and withdrawing several lawsuits. The appointment of Paul Atkins, a known crypto advocate, as SEC Chair signals a friendlier regulatory climate compared to the previous administration under Gary Gensler.
Industry Urges SEC to Clarify Staking Rules
Despite growing interest, the SEC has not approved any ETF featuring a staking mechanism, even though Ethereum ETFs now trade in the U.S. without staking rights.
This week, the Crypto Council for Innovation, backed by 30 leading firms including a16zcrypto, Kraken, Consensys, Lido, Galaxy, and Paradigm, sent a formal letter to the SEC’s newly created Crypto Task Force, led by Commissioner Hester Peirce.
The letter argues that staking is a technical process, not a securities transaction, and urges the SEC to avoid restrictive rules that could hamper innovation or limit staking adoption in regulated investment vehicles.
Staking: A New Frontier in Regulated Crypto Investing?
Staking enables crypto holders to lock their assets to secure blockchain networks and earn rewards in return. In proof-of-stake ecosystems, it’s a core mechanism for transaction validation and network integrity. Bringing staking into regulated ETFs could offer passive income opportunities for investors while helping networks thrive.
