Grayscale's TAO ETP Push Signals Blockchain's Entry into Mainstream Finance

Grayscale Investments has taken a pivotal step toward transforming its Grayscale Bittensor Trust (TAO) into an exchange-traded product (ETP) by filing SEC Form 10, the first formal step for a company to become an SEC-reporting entity. This move, announced on October 12, signals the firm's intent to enhance the trust's regulatory compliance, transparency, and accessibility for institutional and retail investors. By seeking to list TAO Trust shares on the over-the-counter (OTC) market, Grayscale aims to reduce the private placement holding period from 12 months to six months, accelerating liquidity for investors. The development positions TAO as a potential ETP, a classification that would allow the product to trade publicly and broaden its appeal to pension funds, hedge funds, and other regulated investment channels.

The filing underscores growing institutional interest in Bittensor (TAO), a blockchain project focused on decentralized artificial intelligence. Recent price action reflects this momentum: TAO surged nearly 20% in a week following its Coinbase listing, with technical indicators suggesting a potential move toward $500. Analysts attribute the rally to a combination of factors, including the Grayscale Trust's regulatory progress, improved market sentiment, and ecosystem developments such as Ledger cold wallet integration. Cipher2X, a crypto analyst, noted that TAO's breakout above a descending trendline and rising volume indicate strong buyer control, with targets near $500 and $700 in longer-term scenarios.

Grayscale's strategy aligns with broader trends in the crypto market, where ETPs are emerging as a critical vehicle for institutional adoption. Unlike traditional exchange-traded funds (ETFs), ETPs are structured as grantor trusts and file under the Securities Act of 1933 rather than the Investment Company Act of 1940. This distinction allows ETPs to hold physical assets like TAO tokens directly, avoiding the complexities of futures-based products. Deloitte's analysis highlights that ETPs offer tax efficiency and direct exposure to underlying assets, making them attractive for investors seeking simplicity and regulatory clarity. European markets, which pioneered crypto ETPs a decade ago, provide a blueprint for U.S. adoption, with CoinShares CEO Jean-Marie Mognetti noting that infrastructure development-including reliable custodians and liquidity providers-is key to scaling the asset class.

The path to ETP status for TAO is not without challenges. SEC scrutiny of crypto products remains stringent, and Grayscale's competitors, such as Yuma Asset Management, are also vying for regulatory approval. Additionally, the trust's 2.50% expense ratio-higher than traditional ETFs-may deter cost-sensitive investors. However, proponents argue that the benefits of regulatory compliance and institutional access outweigh these costs. As of August 2025, the TAO Trust held $11.4 million in assets under management, with a net asset value (NAV) per share of $7.00. If approved, ETP status could catalyze further inflows, particularly as the Bittensor network prepares for a halving event in December 2025, which will cut token emissions by 50%.

The SEC's recent approval of bitcoin and ether ETPs in 2024 has set a precedent, though the agency's approach to staking and custody rules remains a wildcard. For now, Grayscale's filing represents a calculated bet on the future of crypto regulation and market structure. As TAO's price continues to climb and institutional infrastructure matures, the trust's journey toward ETP status could serve as a bellwether for the broader adoption of blockchain-based assets in traditional finance.

Source: [1] Grayscale Files SEC Form 10 for TAO Trust | PANews (https://www.panewslab.com/en/articles/82206a58-d14c-4af4-9cb1-d2ad5b92740c)

[2] Grayscale files SEC Form 10 for TAO Trust, shortening private ... (https://www.mytokencap.com/choicenews/2829861/)

[3] Grayscale submitted SEC Form 10 for the TAO trust, and the ... (https://www.gate.com/news/detail/14685503)

[4] Grayscale Advances Toward SEC Reporting Status with Bittensor ... (https://www.coinlive.com/news-flash/923794)

[5] Bittensor (TAO) Surges 20%, Coinbase Listing and ... (https://www.tronweekly.com/bittensor-tao-surges-20-coinbase-listing-and-bullish-breakout-signal-2x-gains-ahead/)

[6] TAO Price Surges Post-Liquidity Sweep-Is a Break Above $500 on ... (https://altcoinboom.com/tao-price-surges-post-liquidity-sweep-is-a-break-above-500-on-the-horizon/)

[7] TAO Bullish, SOL Drops To $240, Meanwhile BlockDAG at $0.0013 ... (https://www.analyticsinsight.net/cryptocurrency-analytics-insight/tao-bullish-sol-drops-to-240-meanwhile-blockdag-at-00013-attract-millions-to-presale)

[8] ETP breakthrough: Crypto's regulatory milestone (https://www.deloitte.com/us/en/services/tax/articles/etp-breakthrough-cryptos-regulatory-milestone.html)

[9] Lessons from European Crypto ETPs for the U.S. ETF Market (https://www.wealthmanagement.com/etfs/lessons-from-european-crypto-etps-for-the-u-s-etf-market)

[10] EU Tech Regulations vs. US Trade Policies: A Comparative Analysis (https://legalcurated.com/tech-and-intellectual-property/eu-tech-regulations-vs-us-trade-policies-a-comparative-analysis/)

[11] TAO Price Surge Could Lead to a Rally Beyond $500: ... (https://www.ccn.com/analysis/crypto/bittensor-tao-price-strengthens-uninterrupted-rally/)

[12] Grayscale Bittensor Trust (https://www.grayscale.com/funds/grayscale-bittensor-trust)