The SEC Just Got Its Weirdest Crypto ETF Request Yet—And Why This Bloomberg Senior ETF Analyst Thinks It Might Actually Work

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24-07-2025

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Wall Street's latest crypto experiment just took a significant step forward. Cboe BZX Exchange filed a Form 19b-4 with the Securities and Exchange Commission seeking approval to list the Canary PENGU ETF, a groundbreaking fund that would hold both PENGU memecoin tokens and Pudgy Penguins NFTs. This isn't your typical Bitcoin ETF—it's the first proposed fund to blend memecoins with non-fungible tokens, targeting one of crypto's most beloved penguin communities.Don't Miss:
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What Makes This ETF Different
The Canary PENGU ETF would primarily hold PENGU, the official token of the Pudgy Penguins project, alongside actual Pudgy Penguin NFTs. Think of it as a hybrid investment vehicle where traditional finance meets internet culture, packaged for mainstream investors who want exposure to both a memecoin and the digital collectibles that inspired it.
The timing isn't coincidental. PENGU launched in December as the official token of the Pudgy Penguins NFT collection, targeting investors seeking exposure to niche cryptocurrencies beyond Bitcoin and Ethereum. The token created immediate wealth for existing NFT holders, with single Pudgy Penguin NFT owners receiving 1.7 million PENGU tokens worth nearly $52,000 at launch prices.
The Numbers Behind the Penguins
Current market data reveals both the opportunity and volatility inherent in this space. PENGU trades at approximately $0.01 with daily trading volume exceeding $144 million, while recent 24-hour volume reached $168 million, representing a 75% increase. Meanwhile, Pudgy Penguins NFTs trade at a floor price of 9.38 ETH per piece, up 6% over the past seven days.
The broader Pudgy Penguins ecosystem extends beyond digital assets. The project actively develops physical merchandise and games, including Pudgy Toys and Pudgy World, creating new user interaction avenues. This real-world expansion differentiates it from many memecoins that exist purely in digital space.
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The Regulatory Reality Check
Here's where things get complex. A 19b-4 filing represents the second step in crypto ETF approval, following the initial S-1 registration. Canary Capital filed the S-1 form in March, and this latest filing moves the process forward—but approval remains far from guaranteed.
The SEC's track record with crypto ETFs shows a preference for established assets. Bitcoin and Ethereum ETFs gained approval after years of regulatory back-and-forth, benefiting from their status as relatively mature digital assets. A memecoin-NFT hybrid represents uncharted territory, combining two of crypto's most speculative and culturally-driven sectors.
Consider the precedent: Pudgy Penguins launched on Ethereum in July 2021, reaching an all-time high of almost 36.3 ETH during PENGU token anticipation. Yet NFT floor prices dropped almost 50% after the PENGU token launch, illustrating the volatility regulators typically scrutinize.
Investment Implications and Risks
For retail investors, this ETF proposal highlights crypto's evolution from niche digital currencies to mainstream investment products. Success could open doors for other alternative crypto assets seeking traditional finance exposure. However, several factors warrant caution:
Volatility Concerns: Memecoins typically experience extreme price swings driven by social media sentiment rather than fundamental value. Combining this with NFT market volatility creates a potentially explosive mixture for traditional investors unaccustomed to crypto's boom-bust cycles.
Regulatory Uncertainty: Even if approved, this ETF would face ongoing regulatory scrutiny. Any negative developments in memecoin or NFT regulations could impact fund performance or viability.
Market Maturity: Unlike Bitcoin or Ethereum, PENGU lacks the institutional adoption and use cases that traditionally support long-term value. The token's primary utility stems from its connection to a specific NFT community and cultural movement.The Bigger Picture
This filing represents more than one company's ambitious product launch. It signals institutional finance's growing comfort with crypto's cultural elements—the memes, communities, and digital collectibles that drive much of the sector's innovation and enthusiasm.
Success could validate the investment thesis that internet culture and community-driven assets deserve traditional finance recognition. Failure might reinforce regulatory hesitancy around speculative crypto products, potentially slowing similar innovations.
For investors watching this space, the key question isn't whether Pudgy Penguins will succeed, but whether Wall Street is ready to embrace crypto's most culturally-driven elements. The answer will likely determine not just this ETF's fate, but the future of how traditional finance interacts with internet culture.
The penguins may be cute, but the implications are serious. This filing represents a test case for how far mainstream finance is willing to wade into crypto's cultural waters—and whether regulations can keep pace with innovation that blends investment vehicles with internet memes.
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This article The SEC Just Got Its Weirdest Crypto ETF Request Yet—And Why This Bloomberg Senior ETF Analyst Thinks It Might Actually Work originally appeared on Benzinga.com