Back in the Halcyon era in August 2024, FT Alphaville claimed that the launch of leveraged single stock ETF tracking MicroStrategy stock is a shark jump moment for the ETF industry.
Ah, how sweet/silly naive we were at the time.
Under new SEC Chair Paul Atkins, the leading US financial watchdog will become “hugging, defending, champions.”
The inevitable outcome is this kind of financial hatred.
A company called “Canary Capital” – yeah, not the US either – became the first asset manager to file with the Securities and Exchange Commission, which launches ETFs containing inappropriate tokens.
According to the prospectus, the Moot Fund would “invest” 80-95% of Pengui’s assets. This is clearly the “official token of the Pudgy Penguin project”. An additional 5-15% is retained in Pudgy Penguin NFTS, along with sprinkles of solana and ether.
Perhaps it is a sign that these latter cryptocurrencies (only one of them (ether) has been approved by the SEC as holdings of ETFs) are considered almost grown assets compared to the proposed Suzenisidae-themed holdings.
The filing acknowledges that:
Pengu is a new SPL token that resides in the Solana network. Compared to other digital assets such as Bitcoin, Eth, and Sol, Pengu has few use cases identified other than collector’s items. . .
There is no guarantee that Pengu use will continue to grow. The shrinking use or adoption of Pengu can increase volatility or reduce Pengu’s price, which can negatively affect the value of the stock. The newly released Pengu sale from Escrow may lower Pengu prices and may have a negative impact on your investment in stocks. The Pengu market has limited history, and Pengu’s trading prices show high levels of volatility, and in some cases such volatility was sudden and extreme. Due to such volatility, shareholders may lose all or substantial investments in the trust.
Pengu transactions may be relatively new, barely regulated or unconformed to existing regulations, which may expose you to fraud and security breaches than the established, regulated exchanges of other financial assets or means that could negatively affect the performance of your trust. Disruption in the Pengu Spot Markets, Futures Markets, and The Counter-The Counter (“OTC”) markets can adversely affect Pengu’s availability and thus it can adversely affect the trust’s ability to create and redeem shares. Loss or destruction of a particular “private key” by a custodian can prevent trust from accessing that pen.
Poor penguins are associated with the risk of investing in NFTS. Investing in NFTs carries significant risks due to the highly unstable and speculative nature of the NFT market. The value of NFTs can fluctuate dramatically over a short period of time, influenced by factors such as market demand, trends, celebrity support, and broader economic conditions. Unlike traditional assets, NFTS lacks historical performance data, making it difficult to predict future value. Furthermore, the NFT market is relatively new and unregulated, which could increase sensitivity to market manipulation, fraud and other illegal activities. Investors should be aware that the value of NFT investments can be significantly reduced or become illiquid, leading to potential financial losses.
Tokens is at least a Going Cheep and is currently trading at $0.0103, according to Coingecko, a dive that is 63% from the level that it hatched in December 2024.
And that’s before we reached the NFT. The Eagle Eyes between you will discover that the whole point of the NFTS is that they are impossible. To date, we have always held alternative assets, whether we own stocks, bonds, derivative contracts, or even cryptocurrencies. Apple stocks, tranches of certain bonds, and even Bitcoin are completely exchangeable.
Bringing NFTS changes this equation. Each of the 8,888 Pudgy Penguin NFTS comes in a variety of characteristics, including colour, facial expression, accessories, backgrounds, and more. Certainly, it is this very uniqueness that gives NFTS “value”. At least for those who don’t believe this value is about zero.
It is somewhat unclear how this will work in the fund structure famous for its daily liquidity, constantly updated net asset value, and the arbitrage model promoted by generally approved participants.
To be fair, owners of the Pudgy Penguin NFT have so far made profits, at least if they were on board at the start.
The NFT was cast in 2021 with 0.03 ether. The floor price (the lowest price any of the collection trades) reached 21.68 ether in February 2024. This has resulted in a market capitalization of $500 million. The floor price has since been split into about 9.4 ether, or $23,300.
Propulsions to extend the reach of ETFs into the NFTS realm were probably inevitable, even under the SEC with fewer supine extensions.
The publisher has submitted numerous applications to ETFs that hold cryptocurrencies other than Bitcoin and ether, such as Solana, XRP, and Cardano. Basket products that hold various currencies are also located offshore.
Additionally, three asset managers filed in January to launch a memokine-holding ETF, which lacks even use cases due to more “traditional” cryptocurrency linked to Donald Trump and Elon Musk.
However, even in this era, it is unclear whether Pingu ETFs will actually happen. The Canary capital may have managed to file an application, but that is clearly a low hurdle. Many supporters of the ETF brand hope that everyone has as much chance to get off the ground as their favorite Antarctic birds.
Read more:
– SEC Commissioner Crenshaw tore agents’ “Regulatory Jenga” (FTAV)
– NFTS bonfire (ftav)
