Key Insights
- Cboe BZX aims to list the Canary SUI ETF, which would hold and stake the SUI token.
- The ETF structure mirrors recent bitcoin and ether trust products approved by the US’ regulatory agency.
- Cboe has put several measures in place to minimize risks and offer the best transparency.
Cboe BZX Exchange has filed a proposal with the United States Securities and Exchange Commission to list and trade shares of the Canary SUI ETF under its rule for Commodity-Based Trust Shares.
The ETF, sponsored by Canary Capital Group LLC, seeks to provide investors with regulated exposure to SUI, the native token of the SUI Network, by holding spot SUI and staking a portion through third-party providers. Notably, the trust structure resembles recently approved exchange-traded products that hold bitcoin and ether.
Per the filing, Cboe BZX argues that the proposal meets the standards of the Securities Exchange Act by relying on “other means” to prevent fraudulent and manipulative practices rather than requiring a surveillance-sharing agreement with a regulated market of significant size. This approach is in line with SEC approvals granted to bitcoin and ether ETPs in early 2024.
Market Surveillance and Trading Oversight
In addition, the exchange firm has committed to monitoring trading activity using its existing regulatory framework, supplemented by oversight from FINRA. If approved, the ETF would trade during all exchange sessions and be subject to trading halts if there are discrepancies in data such as net asset value or pricing benchmark dissemination.
Each trust share would represent a fractional ownership of its total SUI holdings. The trust plans to use the CoinDesk SUI USD CCIX 60-minute NY Rate as its pricing benchmark, aggregating data from major spot trading platforms. The trust will rely on third-party custodians for cash and crypto holdings, with SUI stored in cold wallets segregated from other clients.
Liquidity, Arbitrage, and Risk Mitigation
Cboe BZX highlights the 24/7 nature of global SUI trading, the token’s broad distribution, and active arbitrage opportunities as factors that reduce manipulation risks in the filing.
The trust’s structure avoids direct handling of SUI by authorized participants. Instead, third parties acting independently of the fund’s creation and redemption process would facilitate SUI purchases and redemptions. Meanwhile, additional disclosures will cover creation procedures, trading mechanics, and associated risks, ensuring that investors have access to key information at all times.
