Canary Capital is pushing further into niche crypto territory with a new filing for a spot ETF tied to the memecoin Pepe (CRYPTO: PEPE), signaling that the race to bring increasingly speculative digital assets into the ETF wrapper is heating up.

The asset manager submitted a Form S-1 to the U.S. Securities and Exchange Commission (SEC) on Wednesday for the CANARY PEPE ETF, which would directly track the token's price by holding PEPE in custody. The filing also noted that up to 5% of the fund's assets may be allocated to Ethereum (ETH) to cover transaction fees on the Ethereum network.

The move comes despite PEPE's volatile track record and concentrated ownership structure. The token—based on the Pepe the Frog meme—rose to prominence in 2024 but remains about 85% below its all-time high.

While Canary has already filed for ETFs tracking tokens like XRP (CRYPTO: XRP), Solana (CRYPTO: SOL), Hedera (CRYPTO: HBAR) and Sei (CRYPTO: SEI), the firm is increasingly venturing down the risk curve, including a prior filing for a Mog Coin ETF.

Key features and takeaways:

  • Spot exposure: The ETF is designed to directly hold PEPE, offering investors pure price exposure rather than derivatives-based tracking.
  • Fee mechanism: Up to 5% allocation to ETH will be used to pay Ethereum network transaction fees.
  • Concentration risk: The top 10 wallets control roughly 41% of PEPE's circulating supply, highlighting ownership concentration concerns.
  • Weak price momentum: PEPE is still around 85% below its December 2024 peak, according to CoinMarketCap, underscoring volatility risks.
  • Altcoin ETF trend: The filing reflects a broader industry push toward more speculative crypto ETFs as issuers test investor appetite beyond Bitcoin and Ethereum.

The filing also lands amid an evolving regulatory backdrop in the U.S., with uncertainty around crypto legislation—including the proposed CLARITY Act—still shaping how quickly such products can come to market. Canary itself acknowledged that shifting rules around both PEPE and the Ethereum network could materially impact demand and usage, adding another layer of risk to an already high-volatility asset class.

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