Even though some might think NFTs are a thing of the past, Canary Capital believes they could still win over fans, especially on Wall Street.

In a recent chat with Decrypt, Canary Capital CEO Steven McClurg shared his thoughts that the NFT market might be gearing up for a comeback. He pointed out that discussions around funds that track NFT values could really get investors interested in these digital art collectibles.

McClurg told Decrypt that while an ETF focused on NFTs might have seemed impossible not long ago, it’s becoming more likely for U.S. investors now. This shift is thanks to federal regulators becoming more open to crypto-friendly rules and the arrival of “more liquid” NFTs in the market.

“These days, the SEC seems more open to actively managed investment products, and we’re seeing ‘digital art’ that’s easier to trade,” McClurg explained. “Now that the major hurdles are out of the way, I felt like it was the right moment to try and launch an ETF backed by NFTs.”

The CEO’s comments come hot on the heels of Canary Capital’s filing just 10 days prior to introduce a Pudgy Penguins and PENGU ETF in the U.S.—a move that definitely got Crypto Twitter buzzing and created some division.

Some folks in the crypto world poked fun at the ETF filing, with many seeing Canary Capital’s announcement as just hype or fluff to pump up the Pudgy Penguins NFT collection.

Experts previously told Decrypt that wrapping NFTs into ETFs could bring about some technical and structural challenges. The fact that NFTs aren’t always easy to trade could also cause problems for market makers.

However, those who are fans of digital art are hoping that an ETF based on NFTs might just be what’s needed to breathe new life into the somewhat sluggish NFT market.

Last year wasn’t great for NFTs, with the market hitting a three-year low. Sales and trading volumes dropped nearly 20% compared to the year before, according to DappRadar’s 2024 Industry report. Looking at popular NFT collections, it’s a similar story. Popular names like Pudgy Penguins, Crypto Punks, and Milady Maker have seen their values dip by 30%, 7%, and 17% respectively in the last year, based on CoinGecko data.

Despite this market slump, McClurg is still positive, believing digital art is moving towards becoming more widely accepted pretty soon.

“Now that the SEC has decided that digital art and collectibles aren’t securities, I can see a long-term trend developing for digital art and the digital rights attached to them,” McClurg stated. “The biggest obstacles have been removed.”

Edited by James Rubin