Fartcoin (TAO) Rallies on Grayscale and Bitwise ETF Filings

• Grayscale Investments filed to convert its Bittensor Trust into a spot ETF (GTAO) for regulated TAO exposure according to reports.
• Bitwise Asset Management proposed a TAO Strategy ETF allocating up to 60% to TAO tokens as research shows.
• TAO's price rose to $236.64 following the ETF announcements according to market data.
• Bittensor's dTAO upgrade reduced selling pressure by improving emission efficiency according to analysis.

Fartcoin (TAO) surged as Grayscale and Bitwise filed for exchange-traded funds targeting the token. These filings could provide traditional investors regulated access to Bittensor's native cryptocurrency through major exchanges. TAO reached $236.64 on January 2, 2026, reflecting market optimism about institutional adoption. This development follows Bittensor's network upgrades aimed at strengthening its decentralized AI ecosystem.

What Are the Details of the Proposed TAO ETFs?

Grayscale submitted its application to the SEC between December 30, 2025, and January 2, 2026, seeking to convert its OTCQX-traded Bittensor Trust into an ETF. The proposed GTAO ETF features a hybrid creation mechanism allowing in-kind TAO transfers and cash orders, with Coinbase serving as custodian and prime broker. Grayscale plans to leverage its successful Bitcoin ETF structure for this product while charging a 2.5% expense ratio. These moves could bridge decentralized AI assets with traditional finance.

Bitwise's separate filing outlines a TAO Strategy ETF allocating most assets directly to the token alongside European ETPs. This approach targets investors seeking diversified exposure to Bittensor's ecosystem through conventional brokerage accounts. Approval would mark TAO's entry into mainstream financial markets despite regulatory uncertainties. Both filings reflect accelerating institutional interest in AI-focused crypto assets this year.

How Does Bittensor's dTAO Upgrade Impact Its Appeal?

Bittensor's Dynamic TAO (dTAO) upgrade in early 2025 fundamentally reshaped its tokenomics. The update replaced centralized root validators with market-driven subnet competition, where staking activity determines TAO emissions. This change eliminated parasitic subnets and reduced sell pressure by rewarding only high-quality network participants. Such efficiency gains strengthen TAO's investment thesis for institutions.

The upgrade effectively transformed subnets into financialized assets competing for capital allocation. This survival-of-the-fittest model enhanced Bittensor's reputation as the "Bitcoin of AI" by aligning incentives with network growth. Reduced structural selling pressure and improved token utility could support long-term price appreciation. These fundamentals likely contributed to asset managers' ETF interest amid growing institutional focus on AI crypto assets.

What Risks Could Affect TAO ETF Approvals?

Regulatory uncertainty remains the primary hurdle for TAO ETF approvals. The SEC's classification of TAO as a security or commodity hasn't been clarified, creating compliance challenges. Precedent shows the SEC's cautious approach toward crypto ETFs beyond Bitcoin, potentially delaying decisions. Market volatility also presents risks given crypto's price sensitivity to regulatory news. These factors could impact approval timelines.

TAO's $2.3 billion market cap and evolving liquidity pose additional challenges for large-scale institutional products. Custody solutions for AI tokens remain less battle-tested than Bitcoin equivalents. Moreover, Grayscale's 2.5% proposed fee might deter cost-sensitive investors compared to spot Bitcoin ETFs. Market participants should monitor SEC commentary and TAO's on-chain metrics for approval clues.

Competition within decentralized AI could pressure Bittensor's market position during the review period. Short-term price fluctuations may occur while the SEC evaluates filings.