#GrayscaleEyesAVESpotETFConversion

Grayscale's pursuit to convert its Grayscale Avalanche Trust into a full spot Avalanche (AVAX) ETF listed on Nasdaq represents one of the most significant ongoing developments in the altcoin ETF landscape as of February 24, 2026. This move aims to transform a currently private, over-the-counter (OTC) investment vehicle—accessible mainly to accredited investors—into a publicly traded, regulated product that offers seamless, broker-friendly exposure to AVAX tokens. It builds on the massive success of Bitcoin and Ethereum spot ETFs, potentially opening floodgates for institutional capital into Layer-1 ecosystems like Avalanche.
The process is actively progressing, with the most recent milestone being Amendment No. 4 to the Form S-1 registration statement filed with the U.S. Securities and Exchange Commission (SEC) on February 19, 2026. This amendment refines key details in the prospectus, including mechanics for creations/redemptions, staking conditions, sponsor responsibilities, and risk disclosures. The filing confirms Grayscale's intent to rename the product Grayscale Avalanche Trust ETF (or similar) upon effectiveness and Nasdaq listing. As of the latest data (NAV as of February 20, 2026), the existing Trust has a NAV per share of approximately $4.39, assets under management (AUM) of about $5.23 million, and continues to track the CoinDesk AVAX CCIXber Reference Rate (updated from earlier references as of October 2025).
Complete Extended Timeline & Key Milestones
Trust Launch: August 20, 2024 – Grayscale introduces the Grayscale Avalanche Trust as a private placement; trades OTC under ticker AVAXFUN; 2.50% expense ratio; direct AVAX holdings with Coinbase custody.
First Regulatory Move: March 2025 – Nasdaq submits 19b-4 rule change filing to enable listing.
S-1 Filing Kickoff: August 25, 2025 – Grayscale files initial Form S-1 with SEC to convert the Trust into a spot ETF; proposes Nasdaq listing (initial ticker discussions around GAVX); starts with cash-based creations/redemptions.
Staking Feature Addition: Late 2025 amendments (e.g., December 2025) – Introduces proposal to stake up to 85% of AVAX holdings for network rewards (yield passed to shareholders net of fees/custodian cuts); staking requires satisfaction of the "Staking Condition" (regulatory clearance), which remains unmet as of February 2026 filings.
Amendment Progression:
Amendment No. 2: December 2025 – Shifts toward in-kind creations/redemptions (more efficient, tax-advantageous); updates sponsor details (Grayscale Investments Sponsors LLC as sole sponsor), risk/tax sections, and financials.
Amendment No. 3: January 29, 2026 – Further refinements.
Amendment No. 4: February 19, 2026 – Latest update; details Authorized Participant (AP) processes, including optional cash orders via Liquidity Providers; emphasizes Sponsor discretion on caps/limits; reiterates no staking yet due to unmet conditions.
Current Status: S-1 remains under SEC review (active and iterative); no effectiveness date or final approval announced. The Trust operates normally (no distributions, tracks spot AVAX minus fees). Staking is prohibited until conditions are met—Sponsor may opt not to pursue it even if cleared.
No Fixed Deadline: SEC reviews can extend months/years with additional feedback; optimistic scenarios point to potential approval in 2026 amid altcoin ETF momentum, but delays are common.
Detailed Mechanics of the Proposed ETF
Exposure Type: Spot – Direct holding of AVAX tokens (no derivatives/futures).
Creations/Redemptions: Primarily in-kind (APs deliver/receive AVAX); cash options available via Liquidity Providers (Sponsor can cap/limit).
Staking Potential: Up to 85% of holdings could stake on Avalanche for consensus rewards; distributed net to shareholders (after staking provider/custodian fees ~5-10%). This yield feature differentiates it but adds risks (slashing, lockups, regulatory scrutiny).
Partners: Coinbase (custody, prime brokerage, staking facilitation); BNY Mellon (admin/transfer agent).
Fees: Current Trust at 2.50%; final ETF fee TBD (Grayscale has not disclosed in amendments—likely competitive but higher than rivals like VanEck's ~0.30%).
Tracking & Reference: CoinDesk AVAX CCIXber Reference Rate for accurate USD spot pricing.
Accessibility Upgrade: From OTC/private → Nasdaq-listed shares tradable like stocks; no need for crypto wallets/exchanges.
Competitive Landscape & Broader Implications
VanEck Leading: Already launched spot AVAX ETF (VAVX on Nasdaq) by early 2026 (filings from March 2025); low 0.30% fee with waivers on first $500M AUM until February 28, 2026.
Bitwise & Others: Active filings/amendments with staking inclusions.
Grayscale's Position: Not first to market but leverages massive scale/track record (e.g., GBTC conversion success); staking yield could attract yield-seeking investors if approved.
Market Impact Potential: Approval would boost AVAX liquidity, institutional inflows (potentially billions), price discovery, and ecosystem validation (Avalanche's strengths: high TPS, subnets, DeFi/RWA/gaming growth, token burns). Past filing news sparked 9-11%+ rallies and volume surges.
Risks & Challenges: SEC hurdles on staking legality, custody security, market manipulation concerns; volatility; potential for more amendments/delays.
Why This Development Excites the Crypto Community
It signals accelerating mainstream adoption for non-BTC/ETH assets. Grayscale's persistent amendments show commitment despite regulatory back-and-forth. In discussions across platforms, sentiment leans bullish on long-term AVAX upside—especially with staking yield adding passive income appeal. This fits the post-ETH ETF wave, where altcoin products gain traction.
Final Take: Progress is real and incremental—February 19, 2026 amendment keeps the ball rolling. Monitor SEC EDGAR for next filings, Grayscale's site for NAV/AUM updates, and community channels for sentiment.