- Grayscale Investments has filed a proposal with the SEC to list the Grayscale Avalanche Trust (AVAX) on Nasdaq, aiming to offer a spot ETF that tracks the price of AVAX with safeguards against manipulation and volatility.
- If approved, it would be the first spot AVAX product on a major U.S. exchange, broadening institutional access to Avalanche’s ecosystem.
Grayscale Investments, a leading digital asset management firm, has taken a significant step toward expanding its crypto-based exchange-traded products (ETPs) by seeking approval to list the Grayscale Avalanche Trust (AVAX) on the Nasdaq. In a recent filing with the U.S. Securities and Exchange Commission (SEC), the proposal aims to bring the Avalanche blockchain’s native token, AVAX, to mainstream investors through a spot exchange-traded fund (ETF).
A Groundbreaking ETF for Avalanche
The proposed Grayscale AVAX Trust would track the price of AVAX directly, with custody managed by Coinbase Custody Trust Company. The fund’s net asset value (NAV) would be calculated daily based on prices from regulated crypto exchanges such as Kraken, Bitstamp, and Crypto.com. The index price would be weighted by trading volume and scrubbed for anomalies to ensure accurate pricing.
Grayscale’s filing emphasizes extensive safeguards against manipulation, including geographically distributed private-key storage and real-time trade surveillance. The proposal leans on the SEC’s recent approvals of spot Bitcoin and Ethereum ETFs, arguing that Nasdaq’s surveillance-sharing agreement with Coinbase Derivatives, which offers AVAX futures, provides sufficient protection. This correlation between AVAX spot and futures markets would enable effective monitoring.
What Makes the AVAX ETF Unique?
The Grayscale AVAX Trust would be a passive investment vehicle designed to mirror AVAX’s market performance minus fees. Creation and redemption would occur exclusively through cash transactions handled by authorized participants, with each basket representing 10,000 shares. The trust would not engage in active management.
Nasdaq’s proposal includes circuit-breaker mechanisms to halt trading during periods of extreme volatility, ensuring investor protection. Additionally, real-time disclosures of the trust’s holdings and NAV would be mandatory. Avalanche’s proof-of-stake (PoS) consensus mechanism was highlighted as an energy-efficient alternative to Bitcoin’s energy-intensive mining model.
Potential Market Impact
If approved, the Grayscale AVAX Trust would be the first spot AVAX product listed on a major U.S. exchange, opening doors for institutional investors to gain exposure to Avalanche’s growing ecosystem. The move aligns with Grayscale’s strategy of expanding its crypto ETP lineup, which already includes popular products like the Grayscale Bitcoin Trust.
The SEC now has 45 to 90 days to make a decision. A green light could mark a significant milestone for altcoin-based funds in a market still dominated by Bitcoin and Ethereum products. With a market capitalization of $8.4 billion, AVAX could see increased visibility and investment interest.
As regulatory clarity evolves, Grayscale’s move could pave the way for a broader range of crypto ETFs, potentially driving further adoption and legitimizing digital assets in traditional financial markets.
