Canary Capital Bets on Meme Coin Infrastructure With PEPE ETF Filing

Canary Capital just filed for a US spot PEPE ETF—a bold move that signals the asset manager's aggressive push into niche crypto trading products, even as the memecoin bleeds from its December highs.

The Filing Details

On Wednesday, Canary submitted a Form S-1 to the SEC for the CANARY PEPE ETF, designed to track PEPE's price directly. The structure mirrors standard crypto ETF mechanics: all PEPE holdings would sit with a qualified custodian, and the trust can allocate up to 5% of assets in Ether (ETH) to cover transaction fees on the Ethereum network.

This isn't Canary's first rodeo in alternative crypto trading. The firm already manages spot ETFs tracking XRP, Solana (SOL), Hedera (HBAR), and Sei (SEI). Their strategy of chasing smaller-cap crypto assets has intensified—they also filed for a Mog Coin ETF in November, targeting the 353rd-largest crypto token by market cap.

PEPE's Bearish Backdrop

Here's where it gets uncomfortable: PEPE is currently down roughly 85% from its December 2024 all-time high of $0.00002368. Over the past 30 days, the memecoin has managed just a 6.06% gain. For context, PEPE ranks 45th by market cap—roughly 9% the size of Dogecoin (DOGE).

The timing matters. Grayscale's DOGE ETF launched in November with underwhelming results. ETF analyst Eric Balchunas had predicted at least $12 million in opening volume; the actual first-day figure? Just $1.4 million. That's the crypto market telling us memecoin ETF appetite may not be there yet.

Concentration Risk Looms

Canary's own filing reveals a major red flag: PEPE ownership is "highly concentrated." The ten largest wallet addresses collectively hold approximately 41% of total circulating supply as of January 2026. That's significant whale risk for retail investors considering the ETF.

There are currently 513,392 PEPE holders according to Etherscan, a relatively modest figure compared to established layer-1 networks.

The Bigger Picture: Altcoin Season Dependency

Industry observers have debated whether the next altcoin cycle depends on ETF proliferation down the risk curve. Fabian Dori, chief investment officer at Sygnum Bank, predicted that new ETF filings would surge in 2026 following favorable US crypto regulations. "On the basis of the potential passing of the Clarity Act, we would expect that new filings continue to go beyond BTC and ETH," he told us in December.

That optimism faces headwinds, though. The US CLARITY Act hasn't advanced as quickly as expected—stablecoin yield disagreements remain a sticking point. Meanwhile, Bitwise's chief investment officer Matt Hougan argued in March that traditional altcoin cycles are finished; institutional capital now chases yield-bearing instruments and crypto assets generating actual revenue.

Canary's filing notes regulatory uncertainty around PEPE and Ethereum could impact demand, a tacit acknowledgment that the broader regulatory environment remains unsettled.