SEC Filing Document

Company: Canary Staked TRX ETF
Ticker: 
CIK: 2064768
Filing Type: S-1/A
Document Type: S-1/A
Date Filed: 2026-05-15
Accession Number: 0001999371-26-010857
Exchange: 
SIC Code: 6221
SIC Description: Commodity Contracts Brokers & Dealers
URL: https://www.sec.gov/Archives/edgar/data/2064768/000199937126010857/canary-s1a_051526.htm

Chunk 35 of 63
Word Count: 1398
Character Count: 9169

Document Content:

that exchangers that do business in the U.S. register with FinCEN and comply with anti-money laundering regulations may increase the cost of buying and selling TRX and therefore may adversely affect the price of TRX and an investment in the Shares. The Office of Foreign Assets Control (“OFAC”) of the U.S. Department of the Treasury (the “U.S. Treasury Department”) has added digital currency addresses to the list of Specially Designated Nationals whose assets are blocked, and with whom U.S. persons are generally prohibited from dealing. Such actions by OFAC, or by similar organizations in other jurisdictions, may introduce uncertainty in the market as to whether TRX that has been associated with such addresses in the past can be easily sold. This “tainted” TRX may trade at a substantial discount to untainted TRX. Reduced fungibility in the TRX markets may reduce the liquidity of TRX and therefore adversely affect their price.

In February 2020,
then-U.S. Treasury Secretary Steven Mnuchin stated that digital assets were a “crucial area” on which the U.S. Treasury Department
has spent significant time. Secretary Mnuchin announced that the U.S. Treasury Department is preparing significant new regulations governing
digital asset activities to address concerns regarding the potential use for facilitating money laundering and other illicit activities.
In December 2020, FinCEN, a bureau within the U.S. Treasury Department, proposed a rule that would require financial institutions to submit
reports, keep records, and verify the identity of customers for certain transactions to or from so-called “unhosted” wallets,
also commonly referred to as self-hosted wallets. In January 2021, U.S. Treasury Secretary nominee Janet Yellen stated her belief that
regulators should “look closely at how to encourage the use of digital assets for legitimate activities while curtailing their use
for malign and illegal activities.”

Under regulations
from the New York State Department of Financial Services (“NYDFS”), businesses involved in digital asset business activity
for third parties in or involving New York, excluding merchants and consumers, must apply for a license, commonly known as a BitLicense,
from the NYDFS and must comply with anti-money laundering, cyber security, consumer protection, and financial and reporting requirements,
among others. As an alternative to a BitLicense, a firm can apply for a charter to become a limited purpose trust company under New York
law qualified to engage in certain digital asset business activities. Other states have considered or approved digital asset business
activity statutes or rules, passing, for example, regulations or guidance indicating that certain digital asset business activities constitute
money transmission requiring licensure.

The inconsistency
in applying money transmitting licensure requirements to certain businesses may make it more difficult for these businesses to provide
services, which may affect consumer adoption of TRX and its price. In an attempt to address these issues, the Uniform Law Commission passed
a model law in July 2017, the Uniform Regulation of Virtual Currency Businesses Act, which has many similarities to the BitLicense and
features a multistate reciprocity licensure feature, wherein a business licensed in one state could apply for accelerated licensure procedures
in other states. It is still unclear, however, how many states, if any, will adopt some or all of the model legislation.

Law
enforcement agencies have often relied on the transparency of blockchains to facilitate investigations. However, certain
privacy-enhancing features have been, or are expected to be, introduced to a number of digital asset networks. If the Tron Network
were to adopt any of these features, these features may provide law enforcement agencies with less visibility into transaction-level
data. For example, “privacy pools,” zero knowledge proofs, and other technologies that could enhance privacy have been
discussed by participants in the digital asset industry. Europol, the European Union’s law enforcement agency, released a
report in October 2017 noting the increased use of privacy-enhancing digital assets like Zcash and Monero in criminal activity on
the internet. In August 2022, OFAC banned all U.S. citizens from using Tornado Cash, a digital asset protocol designed to obfuscate
blockchain transactions, by adding certain Solana wallet addresses associated with the protocol to its Specially Designated
Nationals list. On October 19, 2023, FinCEN published a proposed rulemaking to apply the authorities in Section 311 of the USA
PATRIOT Act to impose requirements on financial institutions that engage in convertible virtual currency (“CVC”)
transactions with CVC mixers. The proposed rule, if adopted, would require covered financial institutions to report to FinCEN any
CVC transactions they process that involves CVC mixing within or involving a jurisdiction outside the United States. The term
“CVC mixing” covers more than just transactions that involve CVC mixers like Tornado Cash, and seemingly could cover a
broader range of conduct involving technologies, services, or methods that have the effect of obfuscating the source, destination,
or amount of a CVC transaction, whether or not the obfuscation was intentional. If the rule were to be adopted as proposed and if
the Tron Network were to be deemed to or were to adopt features which come within the rule’s ambit, it could cause covered
financial institutions – such as many virtual currency exchanges, or the Trust’s service providers, such as the Cash
Custodian – to reduce support for or cease offering services for TRX or to the Trust, which could impair the utility of TRX,
the value of the Shares and the Trust’s ability to operate in compliance with new laws and regulations.

Future
and current regulations by a U.S. or foreign government or quasi-governmental agency could have an adverse effect on an investment in
the Trust.

The regulation of
TRX and related products and services continues to evolve, may take many different forms and will, therefore, impact the Tron Network
and TRX and their usage in a variety of manners. The inconsistent and sometimes conflicting regulatory landscape may make it more difficult
for TRX businesses to provide services, which may impede the growth of the TRX economy and have an adverse effect on consumer adoption
of TRX. There is a possibility of future regulatory change altering, perhaps to a material extent, the nature of an investment in the
Shares or the ability of the Trust to continue to operate.

Changes to current
regulatory determinations of TRX’s status under federal or state securities laws, changes to regulations surrounding TRX futures
or related products, or actions by a U.S. or foreign government or quasi-governmental agency exerting regulatory authority over TRX, the
Tron Network, TRX trading, or related activities impacting other parts of the digital asset market, may adversely impact TRX and therefore
may have an adverse effect on the value of an investment in the Trust.

The
Trust is not a registered investment company and is not subject to the Commodity Exchange Act.

The Trust is not
a registered investment company subject to the Investment Company Act. Consequently, Shareholders of the Trust do not have the regulatory
protections provided to Shareholders in registered and regulated investment companies, which, for example, require investment companies
to have a certain percentage of disinterested directors and regulate the relationship between the investment company and certain of its
affiliates. Further, the Trust will not hold or trade in commodity futures contracts regulated by the Commodity Exchange Act, as administered
by the CFTC. The Trust will not engage in “retail commodity transactions”— any TRX transaction entered into on a leveraged,
margined or financed basis (as described above). Such transactions are deemed to be commodity futures under the Commodity Exchange Act
and subject to CFTC jurisdiction. Furthermore, the Sponsor believes that the Trust is not a commodity pool for purposes of the Commodity
Exchange Act. Consequently, Shareholders will not have the regulatory protections provided to Shareholders in Commodity Exchange Act-regulated
instruments or commodity pools.

Trading
on digital asset trading platforms outside the United States is not subject to U.S. regulation and may be less reliable than U.S. trading
platforms.

To the extent any
of the Trust’s trading is conducted on digital asset trading platforms outside the United States, trading on such trading platforms
is not regulated by any U.S. governmental agency and may involve certain risks not applicable to trading on U.S. trading platforms. Certain
foreign markets may be more susceptible to disruption than U.S. trading platforms. These factors could adversely affect the performance
of the Trust.

Future
legal or regulatory developments may negatively affect the value of TRX or require the Trust or the Sponsor to become registered
with the SEC or CFTC, which may cause the Trust to liquidate.