Canary Capital Proposes Staking at Least 90% of INJ Fund Tokens
Key Facts
Canary Capital intends to stake at least 90% of the INJ tokens held by its proposed exchange-traded fund under normal circumstances, according to an amended fund prospectus filed with the U.S. Securities and Exchange Commission on 24 September 2026. The approach excludes tokens needed to meet redemptions and pay expenses, linking the amount of staked assets to the fund's operational needs. The plan aims to earn staking rewards on tokens held by the fund, taking these exceptions into account when allocating its assets. According to the prospectus, accrued rewards are included in the daily net asset value calculation and counted alongside the fund's assets for valuation purposes. This valuation includes rewards accrued from the staking program, while the number of tokens represented by each share is also subject to the impact of fees and expenses.
The prospectus provides for staking fees to be deducted from the rewards the fund receives, making those fees a deduction from proceeds before shareholders benefit from them. If rewards are insufficient to cover fees and expenses, the amount of INJ represented by each share "will decline over time," according to the fund's disclosure. The September prospectus left the expected total staking fee percentage blank in the proposed program's financial terms. Alongside these deductions, the prospectus warned that staking could increase shareholders' tax liabilities. This could reduce the benefit of the additional yield sought through participation in the program, according to the warning in the disclosure. For its part, Injective states in its comparison of holding tokens and fund shares that "staking rewards are variable and not guaranteed." Shareholder proceeds are therefore subject to the impact of variable rewards, fees and expenses, as well as potential tax liabilities associated with staking.
The unstaking mechanism imposes a time constraint on token availability, with the unbonding period following undelegation lasting 21 days, according to the fund's prospectus. Tokens remain locked during this period and cannot be transferred until it ends. They also stop earning staking rewards while waiting, meaning the unbonding period combines transfer restrictions with a halt in rewards. On custody, the custodian exclusively holds the private keys to staked tokens and retains possession and control of them, according to the disclosure. Owning fund shares differs from owning tokens in terms of the rights available on the Injective network, according to the comparison published by the network. Shares do not give investors the right to use tokens within applications or to vote in network governance. Both capabilities remain features of direct token ownership, according to the same comparison.
The fund's June disclosure outlined how the program's proceeds would be retained, stating that "all staking rewards will be restaked." It excluded tokens needed to meet redemptions, pay expenses and safeguard assets, needs that limit the amount reallocated to staking. Regarding the treatment of these proceeds, the disclosure said the fund "does not intend to distribute proceeds from the staking program" to shareholders. Under this approach, rewards are used for restaking within the fund, with amounts retained for the exempted purposes, rather than distributing the program's proceeds to shareholders. The June disclosure also ruled out using leverage and derivatives to achieve the fund's investment objectives.
The fund's original registration application dates to 17 July 2025, when it was filed with the U.S. Securities and Exchange Commission. In the broader regulatory context for cryptocurrency funds, the SEC approved generic listing standards for commodity-based fund shares. These standards allow exchanges to list qualifying products without submitting a separate rule-change proposal for each product. Reuters quoted Canary Capital founder Steven McClurg as saying, in the context of cryptocurrency fund expansion following streamlined listing rules: "We're all preparing for a wave of launches." The INJ fund's prospectus dated 24 September 2026 is a preliminary prospectus and describes the proposed offering as part of the registration process. It requires the registration statement to become effective before securities can be sold, leaving sales contingent on meeting that condition.