C (4:00)

Welcome everyone. We have a great guest here for you today. It's Stephen McClurg. He's the CEO. He's the founder of Canary Capital. And Canary Capital is a digital asset investment firm known for building some of the Most Innovative Crypto ETFs and Single Trust assets in this market. If you're seeing an innovative crypto ETF hitting the market, there's a really good chance Canary Capital is behind it in some capacity. Steven, really excited to have you on today.

D (4:30)

Hey, Brian, really nice to be here. Thanks for having me.

C (4:33)

Yeah. And we, right before we jumped on, I was saying I'm really excited truthfully to have you on, because I know Canary Capital has done some really fun stuff in the space, some impactful things in the crypto space. But before we jump into that, we'd love to know a little bit about your background.

D (4:49)

Yeah, so I'm actually, I'm a tradfi guy that got into the crypto space full time almost 10 years ago. I got a little bored in the bond Market, you know, we were just, you know, it was like time, you know, bonds kind of got to a point to where they topped out and we decided that, or I decided that, like, yeah, this is a little boring. Yields are kind of low, spreads are tight, top of the market vibes. And 2016 decided to go all in on the new technology that was out there. And for me, that was blockchain.

C (5:29)

Yeah, I love that. And I love that you have a traditional finance background and that makes a lot of sense because of what you've been doing at Canary Capital. You want to give every. All of our audience and our listeners some insight on what Canary Capital is and what you've been building.

D (5:45)

Yeah, absolutely. So, you know, Canary Capital actually started as a hedge fund platform. You know, we've been running hedge funds in the crypto space for years. And, you know, so we. We started off Canary running hedge funds. And when about this time last year, we saw an opportunity for E. ETF filings. Actually, a little bit further back, September of 2024, I was like, all right, it's time for altcoins to come live. Bitcoin and ETH have. Have gone out and now we're going to go after everything else that we think are interesting. So we just started filing away out of nowhere. Everybody's like, who are these Canary Capital people? And I think finally somebody, you know, people, people started realizing who the team was, you know, because We've been around ETFs for a while and. But yeah, we sort of just came out of nowhere without saying anything and just started filing ETFs.

C (6:37)

Yeah, and that's a great point because I know myself personally, who follows the news, you know, day in, day out, hour by hour, literally minute by minute. I started seeing Canary Capital pop up across my feed constantly and started to do more and more research. And you've created some of the most unique products in the market, from XRP to hbar to Marinade Steak Soul. I believe I saw to what we talked about earlier. I'm a big Pengu fan. How do you internally decide which assets get a trust or an etf?

D (7:09)

Well, what we look at is more of what we think the market demand is. There is a filter where we're not just putting anything out there because somebody might be a buyer. We do have a bit of a filter. We want to make sure that we think it's going to be compliant. We think that it's interesting enough that we care about it, but really it's market driven. If we think that there's strong demand in the market. We're going to go forward with it. So that's why we went out with XRP Solana, obviously the fourth largest. Well, fourth and sixth because our BNB is the fifth largest. But those are the fourth and the sixth large, sorry, third and the fifth largest. You know, and then you have, you know, and then I really love Litecoin. I always have. You know, I, I thought it was brilliant when it launched, you know, just kind of being, you know, silver to Bitcoin's gold. But what really interested me in Litecoin in the last two years was the introduction of privacy features, optional privacy features. And I think privacy is extremely important, especially now. A lot of people that are big bitcoin people are starting to look at privacy now and thinking, okay, well bitcoin's done its thing. What's out there in the privacy realm? So I think Litecoin is going to be one of the winners. And then of course hbar, which is a massive enterprise software support system and not even a real blockchain, it's a little bit unique. So, so we, we thought that hbar was extremely important even though it wasn't like a top five token. But the network itself is widely used, widely well received among more, I'm going to say more institutional. When people say institutional they mean Wall Street. But when I'm saying institutional, when it relates to Hedera, it's more of the software engineers, the, you know, Intel, Oracle, Enterprise data systems.

C (9:21)

Yeah, and you make a, you bring up a great point around Litecoin. I actually went, you know, privacy has been like, as you know, you seem to have a pretty good pulse on the, on the current space has been a popular meta recently with like zcash and the Moneros and I actually just recently went down a little bit of a rabbit hole around Litecoin. It made me a little nostalgic. I remember back in like the 2007, 17 days and following Charlie Lee and everything they were doing on Litecoin. So it's certainly interesting how you, you look at these more speculative cryptos and you develop a thesis and a plan behind them. While a lot of firms focus on Bitcoin, they focus on Ethereum. But you seem comfortable with these really non obvious assets. I should say. Does that reflect in your actual conviction or your willingness to innovate for investors or. A little bit, all the above.

D (10:14)

I mean, a little bit of the above. One of the interesting things you asked me about my background, I actually took a little bit of time away from traditional finance years and years ago and worked at Electronic Arts, the video game company in the mobile division right when the iPhone came out. So I saw firsthand just an explosion of new technology. And what was really interesting about that period of time was even before iPhone games came out, we were doing acquisitions of companies in South Korea and Japan because they were five years ahead of the rest of the world when it came to mobile devices and mobile applications. And even in cryptocurrencies, Japan and Korea is head and shoulders above everybody else as far as innovation and adoption. So I tend to look to see what's happening there first and then kind of bring it back to the US to try to get caught up. But what I learned in my brief stint in the video game business is that if you're not constantly improving and innovating, you're going to get behind. And for instance, when the iPhone came out, there were people at EA putting, particularly the CEO at the time that was like, oh yeah, this iPhone thing is a fad. I remember him saying that. And I was like, oh yeah, you think it's a fad? I mean, you know, it's not. And it's a whole new operating system that people are going to be building on that is so much more advanced than what existed. What existed at the time was Java and Brew were the two main operating systems. And that was like, basically, you know, with Javan Brew, you can make, you know, snake on an iPhone, right? Or Bowling or Tetris, right? And iOS just made so many other things possible and things got left behind. I actually look at bitcoin the same way. You know, bitcoin was the first, it was the best. And it's widely adopted. A lot of people use it for money, but will they use it forever? I don't know. Unless it keeps innovating, it keeps addressing some of the issues that are real issues in the world. It could get left behind. I don't think it's in that position right now, but I'm constantly on the lookout for what is next. And my previous company, Valkyrie, we really focused on bitcoin. And we were part of the launches of the first Bitcoin mining ETF, the first NASDAQ traded Bitcoin futures ETF, and then one of the many Bitcoin spot ETFs that launched all on the same day. So we were constantly innovating on the bitcoin coin side of things. And once Bitcoin ETFs came out, I was like, all right, well, what's next? Who's building really cool things now and that's what I care about.

C (13:16)

Yeah, I love that point of view and it's very similar to how I try to look at markets as well. And you make some good points with Bitcoin. Is it going to be the best payment facilitator out of all the cryptos? We're not exactly sure. That's where it gets tagged a lot with being digital gold a store value. The first, you know, has a great story around it and you know, I don't think it's going anywhere anytime soon. But that doesn't mean to say that it's not going to give opportunity for more unique cryptos in projects and web. Three companies that are building to thrive in this area and it does seem like you're really identifying some really unique ones. And from an ETF perspective, I'm curious Jim, your point of view. It does feel like these institutions do and we've noticed it because the Solana ETF recently came out. We're seeing a little bit just from like a lot. We've seen consecutive days of inflows, but we're seeing a lot more appetite here for more ETFs surrounded around different tokens. Do you think Canary Capital, you ever create a like multi basket ETF of, you know, to facilitate to all of these, you know, people are anxious to get in on them.

B (14:28)

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D (17:37)

Yeah, absolutely. You know we we have already filed for for another ETF that is more of an index More to come on that. But at, yeah, at the moment, you know, you know, I think, I think baskets are important and coming up with unique baskets is extremely important. There are some that already exist that, you know, have the top five or the top 10 cryptocurrencies by market Cap and you know, those are, you know, obviously going to be well received. But you know, I think what we want to do next is come up with things that are a little bit more innovative, that pushes the envelope a little bit more on where we think the, you know, the puck's going.

C (18:18)

Yeah, and we were talking a little bit about this beforehand. I do like the Pengu Token and the Pengu team. So no financial advice for anybody, but I always thought they've been innovating some fun things in the space. You know, if that's what the abstract blockchain and all the gamings, we'd love for you to kind of touch base on their project and what they've been building.

D (18:37)

I absolutely love Pudgy Penguins and that team. As far as all NFTs, meme coins, you put, put it all in the same category. I think that they're the clear winners right now. What they've done, you know, if you go back, there were some other NFT projects that were really interesting for a short period of time, but they sort of fell away. And you know, but, but what, what Penguins is doing is creating a real IP in both the real and the virtual worlds and they figured out how to merge the two and to get excitement around that particular brand. It kind of reminds me of hello Kitty. You know, I was never a collector of hello Kitties, but it was such a huge phenomenal and, and it still is. And they've, they've tapped into that vibe, you know, better than anybody else has. You know, you can go to Walmart and get the plushies, you can get the digital art online. They've got, you know, you know, all kinds of special features that come out cartoons. But you know, the I, the IP really works and I think it's going to work for a long time. I think that's the model that everybody else is going to end up following if they want to be successful.

C (20:01)

Yeah, that's some great call outs. And I honestly, just for my kids, I just bought their children's book they released and you know, I obviously have a connection to them and like what they're doing in the space and what my daytime job is. I absolutely love what they're doing. So it felt like I needed to, but I'm actually really personally excited to get it. And it's, it's interesting how these IPs in web 3 are in crypto. Even though it's a token, it can really relate to the end user and that's, that's something you're identifying and really hats off to being able to identify that and then, then build something so real behind it for you know, institutional institutions and just regular people to buy. What's, what's one narrative in crypto that you think is, I should say like massively misunderstood right now? Do you have anything that comes to your top of your mind?

D (20:52)

Well, I mean look we've, we've covered NFTs obviously and I, I think it's both misunderstood and it's, it's both misunderstood by people that are looking in and by people that are on the inside. You know everybody's like well you know, punks are going to come back and board apes are going to come back and it's like, I just don't know. I mean I think that they've had their, they've had their, their time and it was like a quick come and go but, but you know, if you're, if you're really paying attention. Penguins. I don't, I honestly don't know anything else out there that is, that has that staying power right now. But I'm probably missing something. I mean we've, we've, we've already discussed privacy. I think that's, that's probably the most interesting narrative right now in the space. I want to see a lot more privacy projects taking off. By the way. I think XRP is massively misunderstood. I'll admit that I misunderstood it for probably the first 10 years of its existence. And what they've done in the last few years is so interesting. I mean they've truly taken their time. They've built financial rails and they are now transacting on it by launching their first version of a stablecoin rusd. And it's getting a lot of traction and it moves a lot more cheaply and very quick compared to some other tokens on other chains. But I think that's probably another really misunderstood area and it took me a little while to get there as well.

C (22:31)

Isn't it kind of amazing what we do? We, we, we see these things happening in front of our eyes like what, what coins could be the best for cross border payments or what's gonna be the best ip? I mean if you're in this space really paying attention. I'm sure everybody in our Audience is eager to learn. It's, it is a really fun place to learn and develop it. It's a little different than just looking at charts all days or technical indicators. You can get, you can get plenty of that in crypto as well. But then there's this whole other world of how are we going to disrupt stuff, how is this going to completely change the game? If that's, you could talk about it with banking, you could talk about it with Web3 Gaming, you could talk about it with real world assets, you could talk about it in cross border payments. There's just so many different ways and that's what attracted me to crypto. There's a financial aspect that we all love, obviously, but then there's just this like every day you wake up and there's something new and you're learning and obviously you've captured that with Canary Capital because you've been jumping on certain assets that I'm big fans of and you know, you're giving a lot of people the opportunity, a broader reach to it. Well, I got, I have a question for you because you have this traditional finance backing and I love that. But you're so in tune to the web3world, I can tell. What mistake do you see kind of retail making over and over again? But it does seem like institutions get right.

D (23:56)

Well, by the way, I don't know if institutions get this right either but, but retail certainly gets it wrong a lot. Getting tied into one narrative and thinking that, I mean I, I've seen this across so many different chains, so many different tokens where it's like, okay, I am going to become a, this token maxi and everything else sucks and I'm going to put blinders on, not see anything else and just put all my eggs in this one basket and pray that it all goes well. And then they get online and they get all upset if anybody says anything the least bit negative about the token that they've got money in. Because you know, they're, they're all, they're all in. You know, they, you know, they have no choice but to see the number go up and you know, so you see a lot of wild emotions when, when, when, when people do that and go all in on something. You know, I, I tend to, I mean, look, I, I did, I, I was similar. You know, I mean, I would say when I was investing in cryptocurrencies I was primarily in bitcoin and by the way, it worked out. But, but you know, you've got to keep your eyes open and look out for the next thing. It's like, you know what? I, when the radio came out, it was an amazing technology that everybody around the world used and people still use it. But radio is old technology. I hate to say it, but you're not going to make a whole lot of money in radio anymore. So you've got to be aware when, when, when, when something new comes along. You know, it's sort of like, you know, I'll, I'll also use that example of, you know, when, when everybody was like, you know, you know, personal computers will never be a thing, you know, back in the early 90s. Right. And this Apple thing is crazy. You know, nobody's ever going to use this. Why would you use a personal computer in your home? You know, you, you got these giant databases at work and it just, you know, people get, get fooled and they think that the, that the old technology that they're using is going to be there forever. And that absolutely applies to blockchain. You can have a favorite project, but be aware that there are other projects that are, come along that are, that are competitive and there is, there, you know, there is no clear winner ever. Over long periods of time, there will always be new technologies to take over.

C (26:21)

That's so interesting you say that because when I first got into crypto, which was rather early, I was like almost a bitcoin maxi, you know, I couldn't really see the path for other tokens and people probably look at me and be like, oh, you're kidding me. Now that like, I'm much more down the speculative side of things and I still, still love bitcoin. I love the story around digital gold. I love the connection with Ethereum and stablecoins and Solana is a, as a blockchain. I mean there's. They all, a lot of these can all succeed and thrive. But at one point in my career, or I shouldn't say career, in my, this before my career. And it just. When I first got in, I was like, bitcoin only that's the only way I could see. And now I see the path for all different technologies and tokens to thrive and really change the world. And that's, that's why I love it. Kind of my point earlier where I was just saying, like, it is a lot of fun to be in this space because there's so much innovation and there's so much change and you really want to be paying attention because not only you, you could miss the next best thing and you don't have to play that Game either. You can. You can still, you know, just be more conservative, but, like, there's just. This whole space is changing. And that's what I can tell you've done at Canary Capital, is that you're changing ETFs, as we really thought they were. You know, who would have thought that. That there was Trump or Mog or Ripple and Pangu. There's just. The list goes on and on, so. Really cool. So. So what's the next, let's say like, 12 to 18 months looks for Canary Capital. Is there any partnerships or any vision that you're like, hey, if everything lines up the way, I hope this is where we're going?

D (28:04)

Yeah, look, I mean, you know, we're, you know, we've got several partners already, mostly on, you know, on the exchange level that we're working with, but, you know, we've got four ETFs out the door. I'm hoping for. I'm hoping for eight more in the next 12 months. And our goal is to really put a lot of different things out there and let the market decide which. Which is best. You know, that's. That's really the. The best way to. It's really one of the best ways to fund this space as well. Right. So if you're putting, you know, a lot of good projects that have a token in an ETF format, you're opening the doors up to a lot of people and then let the market decide, you know, which one, which one works better, which one's superior, let them do their due diligence and, you know, and hopefully, hopefully, the best projects win. But by the way, not always that. That's not always how it happens. And in the world of technology, it's often. It's got to be good technology, but it's often the one that's best marketed and best sold is the. Is the one is the winner. So that's also something to be careful of.

C (29:13)

Yeah, really well said. And we appreciate you jumping on today. Before we go, love to give you an opportunity for people to learn more about you and more about Canary Capital.

D (29:22)

Yeah, so we're. Canary Capital is where is our website and. And Canary at Canary Funds on Twitter.

C (29:32)

Thanks again, Stephen. Awesome.

D (29:35)

Thanks for having me.

G (29:47)

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