Grayscale's Move Could Open Floodgates for Altcoin ETFs

Grayscale has taken a significant step toward broadening its digital asset investment offerings by filing a Form S-1 with the U.S. Securities and Exchange Commission (SEC) to convert its Grayscale Chainlink Trust (LINK) into the Grayscale Chainlink Trust ETF (GLNK). If approved, the ETF would trade on NYSE Arca, marking what could be the first-ever U.S. spot ETF for Chainlink, a key infrastructure asset in the decentralized finance (DeFi) ecosystem. The move aligns with Grayscale’s broader strategy to expand beyond its flagship Bitcoin and Ethereum products and into altcoins, leveraging its established trust structure to create a regulated, transparent vehicle for institutional and retail investors seeking exposure to Chainlink’s price action.

The proposed ETF aims to provide investors with direct access to the Chainlink token (LINK) through a cash-based model, allowing participation without the complexities of managing private keys or exchange accounts. This design is intended to lower barriers for mainstream investors and enhance accessibility. The trust will hold LINK directly, with Coinbase Custody serving as the custodian and BNY Mellon acting as administrator and transfer agent. Shares will initially be created and redeemed in blocks of 10,000, with in-kind transactions potentially added later if regulators approve.

Grayscale’s filing also leaves room for future staking of LINK, pending tax and regulatory clearance. This flexibility could enhance the product’s appeal by potentially generating yield for investors. The success of GLNK could set a regulatory precedent for altcoin spot ETFs in the U.S., especially in light of recent applications from BlackRock, Fidelity, and other major institutions. These developments suggest growing institutional demand for diversified, regulated crypto investment vehicles.

Chainlink itself continues to play a pivotal role in blockchain infrastructure, functioning as a decentralized oracle network that connects smart contracts with real-world data. According to CoinGecko, Chainlink ranks 13th among crypto assets by market capitalization, currently valued at $15.6 billion. As of the latest reporting, LINK was trading at $23, reflecting a near 3% increase for the day. The token’s price performance and growing adoption in enterprise use cases underscore its strategic value in the DeFi space, further supporting the rationale for a dedicated ETF product.

The regulatory environment remains a critical factor. Grayscale’s filing aligns with NYSE Arca’s proposed generic listing standards for commodity-based ETPs, which could streamline the approval process for crypto-based products. These standards, if adopted, would reduce the need for case-by-case SEC approvals, potentially accelerating the entry of crypto assets into traditional financial markets. However, the SEC’s ongoing enforcement actions against major digital asset platforms continue to create regulatory uncertainty, adding a layer of complexity to the approval process.

Grayscale’s initiative reflects broader market trends, including increasing demand for altcoin exposure and the maturation of crypto infrastructure. The firm has also announced plans for spot ETFs linked to other altcoins such as Avalanche (AVAX), Dogecoin (DOGE), Litecoin (LTC), Solana (SOL), and XRP. This diversified approach aligns with growing institutional interest in digital assets and the need for regulated investment vehicles that meet evolving investor expectations.

The potential approval of GLNK could reshape capital flows in the crypto market by offering a trusted, transparent avenue for institutional investors to access Chainlink. With macroeconomic factors and regulatory developments influencing investor behavior, the success of Grayscale’s Chainlink ETF could serve as a catalyst for broader adoption of altcoin-based ETFs, further integrating digital assets into traditional financial markets.

Source:

[1] Grayscale files to convert Chainlink trust into ETF (https://cryptobriefing.com/chainlink-trust-etf-conversion/)

[2] Grayscale Files S-1 With The SEC For Chainlink ETF (https://www.banklesstimes.com/articles/2025/09/08/grayscale-files-s-1-with-the-sec-for-chainlink-etf/)