Grayscale’s Spot Avalanche ETF: A Step Towards Approval
In a significant move for the cryptocurrency industry, Nasdaq has filed a 19b-4 form with the U.S. Securities and Exchange Commission (SEC) for the listing and trading of Grayscale’s spot Avalanche exchange-traded fund (ETF). This filing represents a crucial step in the regulatory process for ETFs, as it allows the SEC to assess the proposal’s compliance with existing regulations. Once acknowledged by the SEC, this filing will be published in the Federal Register, officially kicking off its approval process. Grayscale’s proposed ETF aims to convert its existing Avalanche Trust, which was launched in August 2024 as a private placement, into a publicly traded spot ETF, similar to its prior successful initiatives with Bitcoin and Ethereum ETFs.
The underlying assets of the proposed Grayscale Avalanche Trust consist solely of AVAX, the native token of the Avalanche blockchain network. The investment objective of the ETF is structured to ensure that the value of its shares directly correlates with the value of AVAX held by the Trust, with adjustments made for expenses and other liabilities. Notably, Coinbase has been designated as the custodian for the trust, while BNY Mellon Asset Servicing is anticipated to serve as the administrator and transfer agent. This move underscores the ongoing trend in the cryptocurrency landscape, where major asset managers are pursuing innovative investment products, reflecting the growing institutional interest in digital assets.
The recent filing comes on the heels of another significant development in the financial markets—a week earlier, asset management firm VanEck submitted an S-1 registration statement to the SEC, positioning itself to potentially be the first entity to achieve approval for a spot Avalanche ETF. The increasing interest in Avalanche as a viable investment option is reflective of its robust technological foundation. Avalanche is recognized as a fast and scalable Layer 1 blockchain platform, featuring three main chains that cater to different functionalities: the X-Chain for asset transfers, the C-Chain for running Ethereum-compatible smart contracts, and the P-Chain for managing validators and custom blockchains, also known as subnets.
The arrival of Grayscale’s and VanEck’s ETF filings comes at a time of heightened activity in the crypto ETF landscape, particularly coinciding with regulatory shifts initiated under the Trump administration. Following the reelection of Donald Trump, there has been a surge in new spot crypto ETF filings, extending beyond Bitcoin and Ethereum. Numerous firms, including Fidelity, Franklin Templeton, Bitwise, 21Shares, and Canary Capital, are actively seeking SEC approval for various crypto ETFs that intend to track a broader range of digital assets, including SOL, XRP, ADA, DOGE, and LTC.
The regulatory climate surrounding cryptocurrencies has been characterized by a considerable change since the recent U.S. presidential election. Under former SEC Chair Gary Gensler, the agency had faced criticism for its enforcement-focused approach to cryptocurrency regulation. Following Gensler’s departure in January 2024, the SEC has shown signs of adopting a more crypto-friendly stance, appointing former regulator Paul Atkins to lead the agency, pending Senate confirmation. This shift is seen as a potential catalyst for enhancing regulatory clarity and support for the burgeoning cryptocurrency market.
In conjunction with these developments, the SEC has established a new crypto task force led by Commissioner Hester Peirce, aimed at formulating a clear and comprehensive regulatory framework for cryptocurrencies. This initiative reflects a recognition of the need for a balanced regulatory environment that fosters innovation while ensuring investor protection. As the regulatory landscape continues to evolve and adapt to the dynamic nature of the cryptocurrency space, the expected approval of spot ETFs may pave the way for a more mature and integrated financial ecosystem that welcomes institutional involvement.
In summary, Nasdaq’s filing for Grayscale’s spot Avalanche ETF marks a noteworthy milestone in the ongoing efforts to embrace cryptocurrency investment products in the U.S. market. As multiple asset managers pursue similar initiatives and the regulatory environment becomes increasingly supportive, the potential transformation in how investors access cryptocurrencies could usher in a new era for digital asset investment. Industry stakeholders will be closely monitoring the SEC’s response to these filings, as their decisions will significantly influence the future growth trajectory of the cryptocurrency investment landscape.
