The US stock exchange Nasdaq has made a significant move in the cryptocurrency investment landscape by submitting a filing to the US Securities and Exchange Commission (SEC) for the listing of Grayscale Investments’ spot Avalanche exchange-traded fund (ETF). This application, filed on March 27, seeks to amend existing rules to accommodate the Grayscale Avalanche Trust (AVAX), transitioning it from a close-ended fund introduced in August 2024.
Grayscale has indicated on its website that its SEC-reporting products are well-positioned for uplisting, contingent on favorable regulatory circumstances in the U.S. They emphasized that upon conversion, the embedded arbitrage mechanism of ETFs would enable the product to better mirror the underlying asset value.
Currently, the Grayscale Avalanche Trust manages assets valued at $1.76 million, with a net asset value per share set at $10.86, representing a holding of just over 0.49 AVAX per share. According to CoinMarketCap data, the fund is currently trading at a 7.4% premium over its underlying asset value.
Expanding ETF Offerings
Grayscale’s portfolio now encompasses 28 crypto products, of which 25 are singular asset derivatives, complemented by three diversified offerings. The firm is also awaiting the SEC’s decision on its XRP spot ETF and has submitted filings for other products, including a spot Cardano ETF and the conversion of its Litecoin Trust into an ETF. Previous successful conversions of Grayscale’s Ether and Bitcoin close-ended funds into spot ETFs have set a precedent for these developments.
Moreover, in 2024, Grayscale announced a strategic shift to convert portions of its Bitcoin and Ethereum ETFs into spinoff offerings, labeled the Grayscale Bitcoin Mini Trust and Grayscale Ether Mini Trust. These new products are designed with reduced fees, following the trend towards more cost-effective investment solutions in the cryptocurrency space.
As of the end of 2024, over $21 billion has been withdrawn from the Grayscale Bitcoin Trust (GBTC), marking it as the only US-based Bitcoin ETF with a negative investment flow since its inception on January 11, 2024. Despite the outflows, the management fee for this product remains the highest in its category at 1.5% per annum, while other ETFs in Grayscale’s lineup charge fees ranging from 0.15% to 0.25%.
The landscape for Ethereum ETFs mirrors the situation for Bitcoin, where the Grayscale Ether Mini Trust offers the lowest fees compared to other legacy products. This dynamic reflects the growing emphasis on cost-efficiency as competition in the ETF market intensifies.
The ramifications of Nasdaq’s filing for Grayscale’s Avalanche ETF could be profound, potentially expanding the access and appeal of cryptocurrency investments to a broader audience and reinforcing Nasdaq’s role as a pivotal player in the evolving financial ecosystem.
