SEC Filing Document

Company: Canary Staked TRX ETF
Ticker: 
CIK: 2064768
Filing Type: S-1
Document Type: S-1
Date Filed: 2025-04-18
Accession Number: 0001999371-25-004423
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2064768/000199937125004423/canary-s1_041825.htm

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TRX. For example, it may become more difficult or impossible for TRX to be traded, cleared and custodied in the United States as compared to other digital assets that are not considered to be securities, which could in turn negatively affect the liquidity and general acceptance of TRX and cause users to migrate to other digital assets. To the extent that TRX is determined to be a security, the Trust and the Sponsor may also be subject to additional regulatory requirements, including under the 1940 Act, and the Sponsor may be required to register as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). If the Sponsor determines not to comply with such additional regulatory and registration requirements, the Sponsor will terminate the Trust. Any such termination could result in the liquidation of the Trust’s TRX at a time that is disadvantageous to Shareholders.

To the extent that
TRX is deemed to fall within the definition of a “commodity interest” under the CEA, the Trust and the Sponsor may be subject
to additional regulation under the CEA and CFTC regulations. These additional requirements may result in extraordinary, recurring and/or
nonrecurring expenses of the Trust, thereby materially and adversely impacting the Shares. If the Sponsor and/or the Trust determines
not to comply with such additional regulatory and registration requirements, the Sponsor may terminate the Trust. Any such termination
could result in the liquidation of the Trust’s TRX at a time that is disadvantageous to Shareholders.

The SEC has recently
proposed amendments to the custody rules under Rule 206(4)-2 of the Advisers Act. The proposed rule changes would amend the definition
of a “qualified custodian” under Rule 206(4)-2(d)(6) and expand the current custody rule in 206(4)-2 to cover all digital
assets, including TRX, and related advisory activities. If enacted as proposed, these rules would likely impose additional regulatory
requirements with respect to the custody and storage of digital assets, including TRX. The Sponsor is studying the impact that such amendments
may have on the Trust and its arrangements with the TRX Custodian. It is possible that such amendments, if adopted, could prevent the
TRX Custodian from serving as service providers to the Trust, or require potentially significant modifications to existing arrangements
under the Custody Agreement, which could cause the Trust to bear potentially significant increased costs. If the Sponsor is unable to
make such modifications or appoint successor service providers to fill the role that the TRX Custodian currently plays, the Trust’s
operations (including in relation to creations and redemptions of Baskets and the holding of TRX) could be negatively affected, the Trust
could dissolve (including at a time that is potentially disadvantageous to Shareholders), and the value of the Shares or an investment
in the Trust could be affected.

Further, the proposed
amendments could have a severe negative impact on the price of TRX and therefore the value of the Shares if enacted, by, among other things,
making it more difficult for investors to gain access to TRX, or causing certain holders of TRX to sell their holdings.

It may
be illegal now, or in the future, to acquire, own, hold, sell or use TRX in one or more countries, and ownership of, holding or trading
in the Shares may also be considered illegal and subject to sanction.

Although currently
TRX is not regulated or is lightly regulated in most countries, including the United States, one or more countries such as China, India
or Russia may take regulatory actions in the future that severely restricts the right to acquire, own, hold, sell or use TRX or to exchange
TRX for fiat currency. Such an action may also result in the restriction of ownership, holding or trading in the Shares. Such a restriction
could result in the termination and liquidation of the Trust at a time that is disadvantageous to Shareholders, or may adversely affect
an investment in the Shares.

Tax Risk

The
ongoing activities of the Trust may generate tax liabilities for Shareholders.

described below under “United States Federal Income Tax Consequences—Taxation of U.S. Shareholders,” it is expected
that the Trust would be taxed as a C corporation and returns to an owner of Shares would be on an
after-tax basis.. Each sale or other disposition of TRX by the Trust (including,
under current Internal Revenue Service (“IRS”) guidance, the use of TRX to pay expenses of the Trust) will give rise to gain
or loss and will therefore constitute a taxable event for the Trust.

Because
the Trust will be a C corporation and neither a regulated investment company nor a grantor trust, the Trust will not be able to make in-kind
redemption on a tax-free basis. If the Trust redeems Shares in-kind, the Trust will recognize gain in the asset distributed as if the
Trust had sold the asset at it fair market value at the time of the redemption.

The
Trust will not be able to make capital gains dividends. However, a portion of the distributions from the Trust may be eligible to be treated
as “qualified dividends” for individual investors. See “United States Federal Income Tax Consequences—Taxation
of U.S. Shareholders.”

The
tax treatment of TRX and transactions involving TRX for United States federal income tax purposes may change.

Under
current IRS guidance, TRX is treated as property, not as currency, for U.S. federal income tax purposes and transactions involving payment
in TRX in return for goods and services are treated as barter exchanges. Such exchanges result in capital gain or loss measured by the
difference between the price at which TRX is exchanged and the taxpayer’s basis in the TRX. However, because TRX is a new technological
innovation, because IRS guidance has taken the form of administrative pronouncements that may be modified without prior notice and comment,
and because there is as yet little case law on the subject, the U.S. federal income tax treatment of an investment in TRX or in transactions
relating to investments in TRX may change from that described in this Prospectus, possibly with retroactive effect. Any such change in
the U.S. federal income tax treatment of TRX may have a negative effect on prices of TRX and may adversely affect the value of the Shares.
In this regard, the IRS has indicated that it has made it a priority to issue additional guidance related to the taxation of virtual currency
transactions, such as transactions involving TRX. While it has started to issue such additional guidance, whether any future guidance
will adversely affect the U.S. federal income tax treatment of an investment in TRX or in transactions relating to investments in TRX
is unknown. Moreover, future developments that may arise with respect to digital currencies may increase the uncertainty with respect
to the treatment of digital currencies for U.S. federal income tax purposes.

The
tax treatment of TRX and transactions involving TRX for state and local tax purposes is not settled.

Because
TRX is a new technological innovation, the tax treatment of TRX for state and local tax purposes, including, without limitation state
and local income and sales and use taxes, is not settled. It is uncertain what guidance, if any, on the treatment of TRX for state and
local tax purposes may be issued in the future. A state or local government authority’s treatment of TRX may have negative consequences,
including the imposition of a greater tax burden on investors in TRX or the imposition of a greater cost on the acquisition and disposition
of TRX generally. Any such treatment may have a negative effect on prices of TRX and may adversely affect the value of the Shares.

Hard “Fork” Of The TRX Blockchain Could Result In the Trust Incurring A Tax Liability.

a hard fork occurs in the TRX Blockchain, the Trust could temporarily hold both the original TRX and the alternative new TRX. The IRS
has held that a hard fork resulting in the creation of new units of cryptocurrency is a taxable event giving rise to ordinary income.
Moreover, if such an event occurs, the Trust Agreement provides that the Sponsor shall have the discretion to determine whether the original
or the alternative asset shall constitute TRX. The Trust shall treat whichever asset the Sponsor determines is not TRX as Incidental Rights
or IR Virtual Currency, which it has committed to irrevocably abandon.

The
receipt, distribution and/or sale of the alternative TRX may cause the Trust to incur a United States federal, state, and/or local, or
non-U.S., tax liability. Any tax liability could adversely impact an investment in the Shares.

Non-U.S.
Holders may be subject to U.S. federal withholding tax on distributions from the.

Unless
reduced by applicable treaties, distributions treated as dividends will be subject to a 30% withholding tax to non-U.S. Shareholders.

Other Risks

The
Exchange on which the Shares are listed may halt trading in the Trust’s Shares, which would adversely impact a Shareholder’s
ability to sell Shares.