Grayscale's move indicates confidence in altcoins and positions itself amid competing applications from firms like Bitwise and CoinShares for AVAX ETFs.

An approved AVAX ETF could be one of the first U.S.-listed products tracking a smart contract blockchain outside major crypto assets, potentially influencing traditional finance's approach to digital assets.

The ETF will involve Coinbase providing custody and trade execution, with BNY Mellon acting as administrator and transfer agent, facilitating cash creations and redemptions.

Avalanche is a proof-of-stake blockchain designed for scalable subnet networks, with increasing institutional interest exemplified by Visa's integration and the launch of the Avalanche Visa Card.

The ETF would track AVAX's value and potentially reflect staking rewards, with up to 85% of the trust's AVAX potentially staked under certain conditions.

Grayscale has filed an S-1 registration statement with the SEC to convert its Avalanche Trust into a publicly traded spot AVAX ETF on Nasdaq, aiming to provide regulated exposure to Avalanche's native token.

Grayscale aims to diversify beyond its existing Bitcoin and Ethereum funds, which currently manage over $30 billion, signaling confidence in altcoin markets.

Despite institutional support, AVAX's price has declined 9% over the past year to around $24.25, down from its all-time high of $54.11 in December 2024.

This move follows a March 2025 SEC filing by NASDAQ to list an AVAX ETF, with plans to rename the trust as Grayscale AVAX Trust ETF upon approval.

The proposed ETF will mirror AVAX's price, potentially reflect staking rewards, and involve authorized participants for creations and redemptions, with Coinbase providing custody and trade services and BNY Mellon acting as administrator.

This initiative exemplifies the broader trend of increasing legitimacy for crypto assets in traditional finance, as firms seek regulatory-compliant products to expand market access.

It also reflects industry efforts to establish institutional-grade crypto investment vehicles amid growing demand, especially following delays in Solana ETF approvals.