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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Trust on any sale of assets by the Trust. Taxation of U.S. Shareholders The Trust may periodically make distributions to its Shareholders. To the extent such distributions are out of the Trust’s earnings and profits such distributions will be treated as dividends to the Shareholders. Such dividends may be eligible to be treated as “qualified dividends” for individual Shareholders or eligible for a dividends received deduction by corporate Shareholders depending other factual circumstances. If a distribution is not paid out of earnings and profits it will be treated, first, as a reduction of the Shareholder’s basis, and, to the extent the distribution exceeds the Shareholder’s basis as gain from the sale or disposition of the Shares. A distribution that reduces a Shareholder’s basis is not currently taxable but will increase the amount of gain or reduce the amount of loss recognized on an ultimate sale or disposition of the Shares.

Current
IRS guidance on the treatment of convertible virtual currencies classifies TRX as “property” that is not currency for
U.S. federal income tax purposes and clarifies that TRX can be held as a capital asset, but it does not address several other
aspects of the U.S. federal income tax treatment of TRX. Because TRX is a new technological innovation, the U.S. federal income tax
treatment of TRX or transactions relating to investments in TRX may evolve and change from that discussed below, possibly with
retroactive effect. 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 the IRS 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
Trust expects to sell or use TRX to pay certain expenses of the Trust or to fund cash redemptions if and when applicable. If the Trust
sells TRX (for example to generate cash to pay fees or expenses) or is treated as selling TRX (for example by using TRX to pay fees or
expenses), the Trust will generally recognize gain or loss on the use of TRX to pay expenses.

Upon
a Shareholder’s sale of some or all of its Shares, the Shareholder will recognize gain or loss on the sale in an amount equal to
the difference between (a) the amount realized pursuant to the sale of the Shares, and (b) the Shareholder’s tax basis in the Shares
sold. A Shareholder’s tax basis is generally the amount paid for the Shares, but is subject to some adjustments. Based on current
IRS guidance, such gain or loss on the sale of Shares will generally be long-term capital gain or loss if the Shareholder has a holding
period of greater than one year in the Shares that were sold and otherwise will be short-term capital gain or loss.

Sales of TRX
to fund cash redemptions are expected to result in gains and losses with such gains and losses expected to be treated as incurred
by the Trust.

After
any sale or redemption of less than all of a Shareholder’s Shares, the Shareholder’s tax basis for its Shares generally will
be equal to its tax basis in its Shares immediately prior to the sale or redemption, less the portion of such basis which is taken into
account in determining the amount of gain or loss recognized by the Shareholder upon such sale or cash redemption.

3.8% Tax on Net Investment
Income

Certain
U.S. Shareholders, who are individuals, are required to pay a 3.8% tax on the lesser of the excess of their modified adjusted gross income
over a threshold amount ($250,000 for married persons filing jointly and $200,000 for single taxpayers) or their “net investment
income,” which generally includes capital gains from the disposition of property. This tax is in addition to any capital gains taxes
due on such investment income. A similar tax applies to estates and trusts. U.S. Shareholders should consult their own tax advisers regarding
the effect, if any, this tax may have on their investment in the Shares.

Brokerage Fees and Trust Expenses

Any
brokerage or other transaction fee incurred by a Shareholder in purchasing Shares will be treated as part of the Shareholder’s tax
basis in the underlying assets of the Trust. Similarly, any brokerage fee incurred by a Shareholder in selling Shares will reduce the
amount realized by the Shareholder with respect to the sale.

For
tax years beginning after December 31, 2025, noncorporate taxpayers may deduct certain miscellaneous itemized deductions only to the extent
they exceed in the aggregate 2% of the taxpayer’s adjusted gross income.

Investment by Certain Retirement
Plans

Individual
retirement accounts (“IRAs”) and participant-directed accounts under tax-qualified retirement plans are limited in the types
of investments they may make under the Code. Potential purchasers of Shares that are IRAs or participant-directed accounts under a Code
section 401(a) plan should consult with their own tax advisors as to the tax consequences of a purchase of Shares.

United States Information Reporting
and Backup Withholding; Tax Return Reporting for Cryptocurrency

The
Trustee will file certain information returns with the IRS, and provide certain tax-related information to Shareholders, in connection
with the Trust. To the extent required by applicable regulations, each Shareholder will be provided with information regarding its allocable
portion of the Trust’s annual income, expenses, gains and losses (if any). A U.S. Shareholder may be subject to United States backup
withholding tax in certain circumstances unless it provides its taxpayer identification number and complies with certain certification
procedures. Non-U.S. Shareholders may have to comply with certification procedures to establish that they are not a United States person,
and some Non-U.S. Shareholders may be required to meet certain information reporting or certification requirements imposed by Code requirements
popularly referred to as “FATCA” in order to avoid certain information reporting and withholding tax requirements.

The
amount of any backup withholding will be allowed as a credit against a Shareholder’s U.S. federal income tax liability and may entitle
the Shareholder to a refund, provided that the required information is furnished to the IRS in a timely manner.

Individual
U.S. Shareholders will be required to report on their federal income tax return the receipt, acquisition, sale, or exchange of any financial
interest in virtual currency, which includes a Shareholder’s interest in TRX held by the Trust.

Taxation of Authorized
Participants

If an Authorized
Participant invests in the Trust on its own behalf, the Authorized Participant will generally recognize income, gain, loss or deduction
as described for U.S. Shareholders. If an Authorized Participant is acting as agent for one or more other persons, who are the beneficial
owners of the Shares, the Authorized Participant will be obligated to issue an information statement to the beneficial owners, who will
recognize the consequences described above for U.S. Shareholders.

Taxation in Jurisdictions Other
Than the United States

Prospective
purchasers of Shares that are based in or acting out of a jurisdiction other than the United States are advised to consult their own tax
advisers as to the tax consequences under the laws of such jurisdiction (or any other jurisdiction other than the United States in which
they are subject to taxation) of their purchase, holding, sale and redemption of or any other dealing in Shares and, in particular, as
to whether any value added tax, other consumption tax or transfer tax is payable in relation to such purchase, holding, sale, redemption
or other dealing.

The
foregoing is only a general summary of the material U.S. federal income tax consequences associated with the purchase, ownership and disposition
of Shares by a U.S. Shareholder. Each prospective Shareholder should consult the Shareholder’s own tax advisor concerning the U.S.
federal, state, local, and non-U.S. tax considerations relevant to an investment in Shares in the Shareholder’s particular tax situation.

PROSPECTIVE
SHAREHOLDERS ARE URGED TO CONSULT THEIR LEGAL AND TAX ADVISERS BEFORE DECIDING WHETHER TO INVEST IN THE SHARES OF THE TRUST.

PURCHASES
BY EMPLOYEE BENEFIT PLANS