An ETF that could place Pudgy Penguins NFTs inside a regulated investment product in the U.S. is testing the boundaries of traditional finance, as illiquid assets are introduced into a capital structure designed for continuous trading. The proposal, filed by Canary Capital with the U.S. Securities and Exchange Commission (SEC) in March 2025, marks one of the first attempts to incorporate NFTs directly into an ETF product. Notably, the fund does not only include PENGU tokens, the official token of the Pudgy Penguins ecosystem, but also directly holds NFTs from this collection. Additionally, the fund may hold other digital assets such as Solana (SOL) and Ethereum (ETH), primarily for trading, custody, and portfolio operations.
This makes the PENGU ETF a rare hybrid model, combining high-liquidity tokens with culturally collectible NFTs. While previous spot crypto ETFs paved the way for institutional capital to flow into crypto, the possibility of an ETF holding NFTs directly marks a breakthrough in bringing digital asset products into the traditional financial system. This novelty also raises a question: if ETFs are designed to provide high liquidity and transparent pricing, is it feasible to include NFTs — which do not meet either of these criteria — in an ETF?
Despite being filed in March 2025, the PENGU ETF remains under review and has not yet been authorized for public sale. According to SEC regulations, the product can only be launched once the registration statement becomes effective following approval. In a recent notice, the SEC extended the decision-making period by an additional 60 days, having designated March 11, 2026, as the final deadline to approve or disapprove the proposal to list the PENGU ETF. Alongside the S-1 filing, the listing process has progressed as the Cboe BZX exchange filed Form 19b-4 with the SEC in June 2025 to propose rule changes for listing and trading.
Leave a Reply