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Canary Capital Seeks SEC Approval for Staked INJ-Based ETF, Signaling a New Era in Staking and Decentralized Finance Integration
Canary Capital has filed a groundbreaking proposal with the U.S. Securities and Exchange Commission (SEC) for the launch of an exchange-traded fund (ETF) based on staked INJ tokens, as reported by Cointelegraph on October 17. This initiative aligns with the SEC's recent classification of staking rewards as taxable income, paving the way for asset managers to use blockchain-backed tokens and delegated staking strategies to generate returns.
At its core, INJ represents the native token of the Injective Protocol, a decentralized finance (DeFi)-oriented Layer-1 blockchain platform. This token plays a vital role in facilitating governance decisions, supporting staking mechanisms, and powering utility within the network. Canary Capital’s proposed ETF aims to utilize approved staking platforms to act as validation nodes, enabling the fund to accumulate staking rewards while offering investors exposure to INJ.
The Delaware-based firm revealed its ambitions in the altcoin investment space earlier this year, signaling an innovative approach to crypto-backed assets. Forming the Delaware Trust in June, Canary Capital laid the groundwork to develop the "Staked Injective ETF." This formal filing follows a broader wave of altcoin-based ETF applications sweeping the U.S. market, indicative of a growing appetite for regulated crypto investment products.
Bridging Traditional Finance and DeFi: A Paradigm Shift
This ETF application exemplifies the accelerating convergence of traditional finance (TradFi) and decentralized finance (DeFi), a trend driven in part by SEC guidelines that treat staking rewards as a legitimate form of income. With these regulatory foundations, asset managers can now harness blockchain protocols to act as staking validators, bridging the gap between the two financial systems.
Commenting on this evolving landscape, Nelly Salzman, a blockchain payment strategist at JP Morgan's Kinexys tokenization platform, anticipated further integration at the 2025 Real World Asset (RWA) Summit in Cannes, France. “The lines between traditional finance and decentralized finance could vanish entirely within a few years,” Salzman predicted, highlighting the sector’s rapid evolution.
Christopher Perkins, chairman of blockchain-focused investment firm CoinFund, underscored the opportunities fostered by this TradFi-DeFi synergy. He noted that integrating digital assets with traditional investment avenues democratizes financial access. This includes unlocking exclusive investment categories—such as private equity-like products—that were previously out of reach for retail investors. Perkins emphasized the potential to further diversify options for both institutional and individual stakeholders.
However, not everyone shares the enthusiasm surrounding this growing alliance. Crypto purist and investor Nick Rose voiced his concerns on X (formerly known as Twitter), critiquing the institutional incursion into blockchain ecosystems. “Institutions and ETFs undermine the essence of crypto,” Rose lamented. He cautioned that the influx of institutional capital, often celebrated as a boon, comes with significant trade-offs. “Wall Street doesn’t just bring money; it brings risk models, portfolio rebalancing, and profit-taking,” he added. “Crypto was never intended to serve as a tool for quarterly earnings reports—it’s meant to represent financial autonomy.”
Where Tradition Meets Innovation
Canary Capital’s ETF filing marks another step toward the blurring of boundaries between traditional and decentralized markets. While regulatory clarity fosters institutional participation, the broader crypto community remains divided on the implications of this shift. As the finance industry navigates the interplay between centralized control and decentralized freedom, the launch of staked token ETFs like the proposed "Staked Injective ETF" will serve as a litmus test for how these worlds can coalesce—or clash.
Stay tuned as industry stakeholders, regulators, and investors redefine the future of finance in the age of blockchain innovation. Whether through compliance-driven products like ETFs or grassroots-driven DeFi applications, the integration of these realms is poised to transform global financial infrastructure.
