Justin Sun has become something of a controversial celebrity in the crypto world. In fact, he thinks the market is underpricing the impact of a TRX ETF. Canary Capital was the last firm to file a TRX ETF. It’s a consequential move that gets TRON one step closer to being able to enter the U.S. capital markets in a fully compliant manner. What are the odds of this ETF being approved? Moreover, how might it affect the overall crypto market? Let's dive into the details.

The Road to SEC Approval: A Long and Winding Path

Sun points out that having submitted the S-1 filing is a key move in the right direction. His argument is that the first complaint will be dismissed. He’s interpreting the SEC’s response as an opportunity to receive useful diagnostic information for making changes and reapplying. This back and forth is common in ETF filings. With experience bringing Bitcoin futures and spot ETFs to market, Sun has a strategic advantage.

The United States’ regulatory landscape for cryptocurrency ETFs has been decidedly dynamic. Recently, the SEC has been inundated with filings for proposed crypto based investment products. This trend is indicative of an increasing demand for digital assets to be fully embraced within traditional financial markets. The SEC has been stringent in its approvals, focusing first and foremost on investor protection and market integrity. The success of a TRX ETF hinges on addressing the SEC's concerns and demonstrating that the product meets the necessary regulatory standards.

The SEC’s ruling on the TRX ETF filing is still pending. The outcome — with any luck and our activist diligence — should be realized by June 2025. The 120-day timeline gives both Canary Capital and the TRON team space and time to engage proactively with regulators. By accommodating their concerns, they can often build a much more compelling case for approval. The decision will not only impact TRX but could set a precedent for other cryptocurrency ETFs seeking to enter the U.S. market.

The TRX Advantage: Staking for Yield

One of the most captivating aspects surrounding the proposed TRX ETF is its staking functionality. If approved, it would be the first crypto ETF approved to offer investors a 4.5% annual yield via staking rewards. This one feature alone would be a huge game-changer, making them highly desirable investments to investors hungry for both capital appreciation and passive income.

TRON is powered by a Delegated Proof-of-Stake (DPoS) consensus mechanism. Validators, or Super Representatives, are elected by the amount of TRX staked to them to produce blocks and protect the network. The low minimum threshold of only 1 TRX to stake opens this up to small and large investors alike. While staked TRX can always be unbonded after a set 14-day waiting period, offering some liquidity, the coin still works for users actively helping secure the network.

The annual yield on Tron is currently 5% — though this figure is expressed before deducting the Super Representatives’ fees. The new ETF would target a net yield of 4.5% to investors. Additionally, staking and yield generation services typically originate with third-party blockchain protocols and decentralized finance (DeFi) platforms. Doing this in an ETF can be a novel approach, one that could provide TRX ETF a first mover advantage, as well.

Potential Market Impact and Institutional Adoption

If approved, a TRX ETF could be significant, not just for the crypto market, but beyond. Here are some potential benefits:

  • Increased accessibility: The ETF would make TRX more accessible to institutional investors who may be hesitant to directly hold cryptocurrencies.
  • Regulatory clarity: The SEC's decision on the ETF could provide much-needed regulatory clarity, encouraging further institutional investment in the space.
  • Legitimization: The approval of a TRX ETF would legitimize cryptocurrencies in the eyes of traditional finance, potentially leading to wider adoption.
  • Competitive advantage: The inclusion of staking could give TRX a competitive advantage over other cryptocurrencies, attracting investors seeking yield.

Furthermore, the growing adoption of USDD 2.0, which has surpassed 350 million in circulation, reflects growing global interest in the TRON ecosystem. The rising adoption of TRON is stealing all the headlines. The possible introduction of a TRX ETF may increase TRX’s attractiveness as an investment vehicle to institutions.

As yet, the path to approval is unclear. Yet, Justin Sun’s confidence and the TRX ETF’s unique staking feature show that the market is likely underestimating the TRX ETF’s potential. As to whether it would actually “boom,” we’ll leave that for another day, but it’s clearly a potentially exciting development that should be followed closely.