VanEck Files for Avalanche ETF as Spot Crypto Funds Gain Regulatory Momentum

In a big advance toward the familiar use of digital assets, investment management firm VanEck has gone and done something quite novel.

They have filed with the U.S. Securities and Exchange Commission (SEC) to list a spot Avalanche (AVAX) exchange-traded fund (ETF) on the Nasdaq stock exchange. If, after a customary wait of several months, the approval comes back green, the fund will offer something quite radical: exposure to the price movements of Avalanche without requiring the actual cryptocurrency itself.

The Avalanche VanEck proposed ETF would be physically backed, meaning it would hold AVAX tokens directly and track their market value. This model allows investors to gain exposure to the performance of Avalanche in a regulated and familiar investment vehicle—bypassing the need for digital wallets, private keys, or engagement with cryptocurrency exchanges. Essentially, it bridges the gap between traditional finance and the fast-evolving world of decentralized blockchain networks.

The filing shows an increasing trend among big asset managers to extend their reach into the world of cryptocurrencies, and especially to apply for spot ETFs. These financial instruments, in concept and structure, are similar to the stock ETFs that have long provided investors with an easy and low-cost way to gain exposure to the actual performance of specific groups of stocks. A key difference is that stock ETFs track down to the minute the price changes for the underlying stocks, whereas with a Bitcoin ETF, for instance, the issuer would have no way of knowing just how well the price of Bitcoin was holding up.

AVAX ETF Expected to Lead Wave of Approvals

Roughly a month after VanEck first proposed the concept of an AVAX ETF, the firm has now filed official paperwork to bring the investment vehicle to market.

A filing for an AVAX ETF with the SEC could initiate the countdown toward approval—or denial—of the product by the industry regulator.

According to James Seyffart, an ETF analyst with Bloomberg, optimism reigns around the VanEck product. He told the author that an Avalanche-based ETF might just get “blessed” with an approval in the next month or so.

This hopeful timeline is based on a more positive vibe from the SEC regarding cryptocurrency investment products. After what felt like a decade of stagnant movement, the agency finally okayed a few Bitcoin spot ETFs in early 2024. That gave way to some Ethereum spot ETF filings, which are currently under review. With these green lights, we’re now obviously looking toward other crypto products getting the go-ahead, with high hopes for Avalanche (AVAX) being one of them.

If the VanEck Avalanche ETF is approved, it could provide a model for other altcoin-based ETFs. Should this happen, we’d have a new category of crypto ETFs that target altcoins. This would likely also push us further into a crypto ETF revolution in which we have ETF products that are tailored to institutional investors and retail investors who are concerned about the risks involved in custody and operational structures.

A Milestone for Avalanche and the ETF Landscape

VanEck’s move could prove to be strategic. Avalanche has steadily built a name for itself as a scalable alternative to Ethereum. It has attracted developers and decentralized apps (dApps) across DeFi, gaming, and NFTs.

The protocol’s unique architecture—a composition of three interoperable blockchains (Avalanche, X, and Y)—has enabled something usually only dreamt of in the blockchain space: real finality at low cost and in a fraction of the time it takes Ethereum and Bitcoin to do the same.

VanEck is bringing Avalanche to traditional markets with an ETF now in registration. This would be a wave of crypto-financial products to surf. (1) The proposed ETF would not only diversify VanEck’s already growing portfolio of digital asset investments but could also: (2) Drive demand for AVAX itself, as fund managers who run the ETF would need to acquire the token and hold it to back investor shares. (3) Put VanEck’s name on the list of institutional players in the crypto space.

The SEC’s review process will be observed with great interest by the wider crypto industry. Should the Avalanche ETF get the go-ahead, it could even signal a thaw in the regulator’s frostiness toward digital assets other than Bitcoin and Ethereum. That would be quite a watershed moment for crypto. The SEC has been all but silent on the number of crypto ETFs it is reviewing, though.

Currently, VanEck’s filing highlights a profound merger of blockchain technology into the world of conventional finance. Should the VanEck Avalanche ETF receive the go-ahead, it could very well be the dawn of a new era in financial product accessibility—opening the Pandora’s box of Avalanche performance to all kinds of investors while they remain cozily ensconced in legacy finance. Indeed, with the current ETF in mind, one of Avalanche’s leading advocates makes the case for why one shouldn’t knock Layer 1 blockchains.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

Follow us on Twitter @themerklehash to stay updated with the latest Crypto, NFT, AI, Cybersecurity, and Metaverse news!