Grayscale Files AVAX ETF Application with SEC Staking Feature

Grayscale Investments has submitted a formal application to the U.S. Securities and Exchange Commission (SEC) to convert its Avalanche Trust into a spot Avalanche (AVAX) ETF. This move builds upon the trust’s launch in August 2024 as a closed-end fund focused on AVAX and marks a key step in Grayscale’s strategy to expand its lineup of altcoin-based ETFs. The fund, if approved, would trade on Nasdaq and offer a regulated and liquid vehicle for institutional and retail investors seeking exposure to the AVAX ecosystem [1].

The S-1 filing, first reported on August 7, 2025, outlines the fund’s operational structure, including Coinbase Custody as the custodian and BNY Mellon serving as the transfer agent and share registrar. The proposed ETF will support cash-based share creation and redemption, enhancing its accessibility and flexibility for investors [2]. Additionally, the fund has the potential to stake up to 85% of its assets, allowing it to generate yield while holding AVAX. This staking feature is positioned as a differentiator in the altcoin ETF market, where passive income generation is becoming a sought-after attribute [3].

The filing signals Grayscale’s broader ambitions to institutionalize altcoin investing. The company has previously launched successful spot ETFs for Bitcoin and Ethereum and now seeks to replicate that model with AVAX and other major digital assets. The use of a streamlined 19b-4 listing process is intended to expedite regulatory approval and bring the product to market more efficiently [4].

Competition in the AVAX ETF space is heating up, with VanEck also filing for a similar product. Both applications highlight the potential for staking as a core feature, reflecting the growing appeal of AVAX’s proof-of-stake mechanism and the broader trend of integrating yield generation into crypto investment products [5]. This competitive landscape underscores the increasing institutional interest in altcoins and the market’s readiness for regulated exposure to a wider range of digital assets.

From an analytical perspective, the Grayscale AVAX ETF filing represents a strategic effort to bridge traditional and crypto markets. The fund’s design—featuring cash-based redemptions and staking capabilities—could attract investors who are hesitant to hold crypto directly but are interested in its potential returns. The SEC’s evaluation of the application will likely depend on broader regulatory developments and the agency’s evolving stance on spot crypto ETFs [6]. While the timeline for approval remains uncertain, the filing itself is a significant milestone in the maturation of the crypto investment landscape.

Source:

[1] Grayscale Files for Spot Avalanche ETF as Crypto Fund ... (https://bravenewcoin.com/insights/grayscale-files-for-spot-avalanche-etf-as-crypto-fund-competition-heats-up)

[2] Grayscale sends S-1 documentation to SEC to list ... (https://www.mitrade.com/insights/news/live-news/article-3-1067069-20250825)

[3] Grayscale Avalanche Trust Converts to Spot ETF - Coinpaper (https://coinpaper.com/10713/grayscale-avalanche-trust-set-for-sec-approved-spot-etf-launch-with-staking-potential?utm_source=snapi)

[4] Grayscale's AVAX ETF: A New Era for Altcoin Investment? (https://www.ainvest.com/news/grayscale-avax-etf-era-altcoin-investment-2508/)

[6] Grayscale's AVAX ETF Filing: A Strategic Inflection Point for ... (https://www.ainvest.com/news/grayscale-avax-etf-filing-strategic-inflection-point-institutional-crypto-exposure-2508/)