U.S. ETFs Democratize Crypto as China's Stablecoin Ambitions Target Dollar Dominance

Source: [1] Bitwise Files S-1 for Avalanche ETF With SEC - CoinGape (https://coingape.com/bitwise-files-s-1-for-avalanche-etf-with-sec/)

[2] Bitwise Moves Forward with Avalanche ETF After SEC Filing - CoinCentral (https://coincentral.com/bitwise-moves-forward-with-avalanche-etf-after-sec-filing-and-trust-setup/)

[3] Avalanche Enters ETF Spotlight with Latest Bitwise SEC Filing - EdgarIndex (https://www.edgarindex.com/2025/09/16/avalanche-enters-etf-spotlight-with-latest-bitwise-sec-filing/)

[4] Bitwise Seeks SEC Approval to Launch Avalanche Spot ETF - Cryptotimes (https://www.cryptotimes.io/2025/09/16/bitwise-seeks-sec-approval-to-launch-avalanche-spot-etf/)

[5] Grayscale Avalanche Trust - Grayscale (https://www.grayscale.com/funds/grayscale-avalanche-trust)

[6] China Flags Surge in Fake Digital Yuan & Stablecoin Investment Scams - Cryptotimes (https://www.cryptotimes.io/2025/07/07/china-flags-surge-in-fake-digital-yuan-stablecoin-investment-scams/)

[7] China Softens Stance: What A Yuan-Backed Stablecoin Dream Could Mean for Global Fintech - Forbes (https://www.forbes.com/sites/digital-assets/2025/08/21/china-softens-stance-what-a-yuan-backed-stablecoin-dream-could-mean-for-global-fintech/)

[8] Hong Kong Sounds Alarm on Unapproved Digital Yuan Stablecoins Amid Market Surge - Cryptonews (https://cryptonews.com/news/hong-kong-sounds-alarm-on-unapproved-digital-yuan-stablecoins-amid-market-surge/)

[9] China’s Secret Weapon Against the Dollar Is a Yuan-Backed Stablecoin - Fortune (https://fortune.com/2025/08/21/chinas-secret-weapon-against-the-dollar-is-a-yuan-stablecoin/)

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The U.S. cryptocurrency market is witnessing a surge in institutional interest in Avalanche (AVAX) through a wave of exchange-traded fund (ETF) proposals. Bitwise, VanEck, and Grayscale have all submitted applications to the Securities and Exchange Commission (SEC) for spot AVAX ETFs, signaling growing confidence in the Layer 1 blockchain’s potential. Bitwise’s filing, submitted in September 2025, seeks to provide direct exposure to AVAX by holding the token in custody via Coinbase Custody Trust Company, with shares to be settled in cash or AVAX. The ETF’s net asset value (NAV) will track the CME CF Avalanche–Dollar Reference Rate, a benchmark calculated daily by CF Benchmarks.

The proposed structure, which avoids derivatives and wallet management for investors, aligns with broader industry trends toward simplifying crypto access. Coinbase Custody, regulated under New York banking law, will safeguard tokens in segregated accounts with cold storage, addressing institutional concerns about security. Meanwhile, Grayscale has applied to convert its existing Avalanche Trust into a spot ETF, while VanEck’s filing remains pending. These moves reflect a strategic shift as asset managers seek to expand beyond Bitcoin and Ethereum, capitalizing on Avalanche’s scalable smart contract capabilities and proof-of-stake consensus mechanism.

Avalanche’s price performance has been volatile but shows signs of recovery. As of September 2025, AVAX traded at $29.83, up 1.29% in 24 hours, though still 57.44% below its all-time high. Analysts note that the token’s treasury accumulation and institutional adoption could drive further demand, though risks remain tied to regulatory uncertainty and market sentiment.

In parallel, Chinese regulators have intensified scrutiny of fraudulent stablecoin schemes, particularly those falsely claiming to be yuan-backed. The Shenzhen Municipal Task Force for Preventing and Combating Illegal Financial Activities warned against unregistered platforms using terms like “virtual currencies” and “digital wealth” to lure investors. The notice emphasized that such operations often involve pyramid schemes, money laundering, and unapproved fundraising, with victims bearing financial losses.

Hong Kong’s Monetary Authority (HKMA) also clarified that no entity has been licensed to issue a yuan-pegged stablecoin under its August 2025 Stablecoin Ordinance. The regulator reiterated that claims of offshore yuan stablecoin issuance are “false news” and urged investors to verify compliance via its public register. These actions underscore China’s dual approach: cracking down on unregulated digital assets while quietly exploring state-backed stablecoins as a tool for yuan internationalization.

Reports suggest the Chinese State Council is reviewing a roadmap for yuan-pegged stablecoins, with Hong Kong and Shanghai as potential pilot zones. The initiative aims to counter the dominance of dollar-pegged stablecoins in cross-border trade and enhance the yuan’s role in global settlements. However, Beijing remains cautious about capital flight and has proposed strict geofencing and reserve requirements to maintain control.

The convergence of U.S. institutional adoption of Avalanche and China’s regulatory pivot highlights diverging strategies in crypto markets. While the former seeks to democratize access to digital assets, the latter prioritizes state control and geopolitical influence. For investors, these developments signal a critical juncture in the evolution of both blockchain technology and global financial infrastructure.

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