VanEck seeks SEC approval for the first AVAX ETF

VanEck Seeks SEC Approval for First AVAX ETF

VanEck wants to bring an ETF based on Avalanche (AVAX) to Wall Street. This ETF is designed to track the value of AVAX as accurately as possible and could provide fresh capital inflows to Avalanche. The SEC must give its approval.

For the US company VanEck, trying to establish ETFs for cryptocurrencies on Wall Street is not uncharted territory. Thus, it is notable that VanEck has now submitted an application to the SEC for an ETF based on Avalanche (AVAX). According to insider reports, this is likely the first AVAX ETF to seek approval from the US Securities and Exchange Commission at the federal level.

VanEck’s plan for an AVAX ETF was submitted shortly after Grayscale’s bid was approved at the end of August. Grayscale argued, through the courts, that the SEC had wrongly denied them, and a court agreed that the SEC must reassess its refusal of a Bitcoin ETF. VanEck is likely also hoping that US courts might push the SEC to be more inclined toward approving crypto ETFs.

An ETF can essentially be described as a structured investment security that reflects the value of its underlying asset. Advantages of an ETF include increased transparency, automated calculations, and clear rules for buying and selling. By mid-October, Grayscale’s and Bitwise’s ETFs for Bitcoin and Ethereum (ETH) generated significant investor interest in the US. Avalanche, with an ETF as described by VanEck, could well benefit from this trend.

Avalanche, being launched in 2020, has significantly grown its ecosystem with dApps and smart contracts, establishing itself as a competitor to Ethereum. However, AVAX’s market capitalization and its share price have been on a downward trend since November 2021. A VanEck ETF could potentially generate fresh capital inflows for Avalanche, creating interest and increasing the price of AVAX.

It remains difficult to predict how quickly the SEC will make its decision regarding VanEck’s application for an AVAX ETF. Meanwhile, the SEC is still swelling up numerous other crypto ETF applications, moving cautiously as many observers often note. VanEck had its first Bitcoin ETF application denied by the SEC in December 2020, only to later be accepted in October 2022.

For the purposes of comparison, a Bitcoin ETF must closely track Bitcoin price in the market. When AVAX is chosen as the underlying asset in an ETF, the selected crypto index should show the development of the quote in a similar fashion.

Then, the consideration for VanEck, just as for Grayscale and competitors, is that an ETF generally benefits from lower fees when compared to actively managed mutual funds with fund managers. Consequently, an ETF based on AVAX would be attractive for potential investors with smaller capital due to its low cost in maintenance and administration, offering greater accessibility than asset management specifically tailored for AVAX.