US investment firm Canary Capital has filed with the Securities and Exchange Commission (SEC) to launch a new exchange-traded fund (ETF) that would combine cryptocurrency and NFTs in a single investment product.

The proposed fund Canary PENGU ETF, would include the $PENGU token—issued on the Solana blockchain—and digital assets from the Ethereum-based Pudgy Penguins NFT collection, marking the first known attempt to include NFTs in a regulated ETF in the United States.

The SEC filing was submitted on Thursday, but it does not provide a timeline for review or approval.

What is an ETF?

An exchange-traded fund (ETF) is a financial product that tracks the performance of a specific asset or group of assets.

ETFs are traded on stock exchanges and can be bought and sold like individual shares. They are typically used to give investors access to specific sectors, commodities, or indexes without requiring them to directly purchase or manage the underlying assets.

In the context of cryptocurrency, ETFs can provide exposure to digital tokens without requiring investors to handle wallets, exchanges, or custody directly.

Why is this significant?

If approved, this would be the first ETF in the US to include NFTs as part of its portfolio. Previous digital asset ETFs—such as those tracking Bitcoin or Ethereum—have only included fungible tokens.

NFTs are inherently different from cryptocurrencies due to their unique nature and variable pricing. Including them in a regulated investment fund presents novel challenges, including how to value, store, and audit such assets. The SEC has yet to issue specific guidance on NFT-based ETFs.

Other firms, including VanEck and Bitwise, have submitted proposals for ETFs tied to cryptocurrencies like Solana, Litecoin, and XRP.