On 7 March 2025, the United States Securities and Exchange Commission (US SEC) initiated a review of a proposal submitted by The Nasdaq Stock Market LLC (Nasdaq) to list and trade shares of the Canary HBAR ETF under Nasdaq Rule 5711(d). This proposal, detailed in the document “Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, to List and Trade Shares of the Canary HBAR ETF under Nasdaq Rule 5711(d) (Commodity-Based Trust Shares),” was filed under Release No. 34-102540; File No. SR-NASDAQ-2025-018. The filing was initially submitted on 21 February 2025 and was later amended and resubmitted in full on 4 March 2025.
The proposal seeks approval for the listing of shares issued by the Canary HBAR ETF, a Delaware statutory trust sponsored by Canary Capital Group LLC. The trust’s primary objective is to provide exposure to Hedera Hashgraph’s native token (HBAR), for its market performance while accounting for operating expenses and liabilities. The custodian of the trust’s HBAR holdings will be BitGo Trust Company, Inc. and Coinbase Custody Trust Company, LLC, while U.S. Bank, N.A. will handle cash custody. The fund’s net asset value (NAV) will be determined daily based on the CoinDesk Hedera USD CCIX 30min NY Rate, which aggregates market prices from multiple digital asset exchanges.
The Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, to List and Trade Shares of the Canary HBAR ETF under Nasdaq Rule 5711(d) (Commodity-Based Trust Shares) asserts that listing the Canary HBAR ETF under Nasdaq Rule 5711(d) aligns with United States Securities Exchange Act of 1934, Section 6(b)(5), which requires exchange rules to prevent fraudulent practices and protect investor interests. Nasdaq contends that the ETF’s listing standards, surveillance-sharing agreements, and transparency mechanisms satisfy regulatory requirements. The trust will operate under Commodity-Based Trust Shares classification, meaning each share represents a fractional undivided ownership interest in the trust’s HBAR holdings.
Additionally, the trust will provide comprehensive disclosures regarding NAV per share, trading volumes, holdings, and fees. The proposal highlights Nasdaq’s ability to obtain trading data from members of the Intermarket Surveillance Group (ISG) and other regulatory bodies to deter market manipulation.
If approved, the Canary HBAR ETF will be subject to initial and continued listing requirements under Nasdaq Rule 5711(d). This includes a minimum of 40,000 shares outstanding at the time of listing, daily NAV calculation and dissemination to all market participants, custodian segregation of assets to ensure investor protection, provisions allowing for both in-kind and cash-based share creation and redemption and strict surveillance and compliance measures to detect market irregularities. The US SEC will evaluate the proposal’s compliance with the United States Securities Exchange Act of 1934 to determine whether the ETF meets regulatory standards.
The US SEC will conduct its review within 45 days of publication in the Federal Register. This period may be extended to 90 days if further analysis is required. The decision depends on whether Nasdaq demonstrates sufficient safeguards against fraudulent and manipulative acts, as required under Section 6(b)(5) of the United States Securities Exchange Act of 1934 .
(Source: https://www.sec.gov/files/rules/sro/nasdaq/2025/34-102540.pdf)
