Bitwise Proposes 70% AVAX Staking in Amended Avalanche ETF Filing

• Bitwise’s revised Avalanche ETF proposal stakes 70% of assets to generate yields on the proof-of-stake network.

• The fee structure features a competitive 0.34% rate, lower than rivals, with a one-month waiver on the first $500 million in assets.

• Custody is handled by Coinbase for AVAX tokens and BNY Mellon for cash, alongside new disclosures on IRS tax rules and technology risks, per SEC filings.

Discover Bitwise Avalanche ETF updates: 70% staking, low fees, and robust risks ahead of SEC review. Stay informed on crypto investment opportunities and secure your portfolio today.

What is the Latest Update on the Bitwise Avalanche ETF Filing?

Bitwise Avalanche ETF filing has been amended to incorporate a significant staking mechanism, allowing up to 70% of its AVAX holdings to participate in Avalanche’s proof-of-stake network for yield generation. This revision, submitted to the SEC, also includes adjusted fees and detailed operational terms to align with regulatory standards. The changes aim to provide investors with both price exposure and regulated income streams, marking a pivotal evolution in spot crypto ETF structures.

How Does the Staking Plan Work in the Bitwise Avalanche ETF?

The staking allocation in the Bitwise Avalanche ETF involves delegating up to 70% of the fund’s AVAX tokens to validators on the Avalanche network. According to the amended filing, 12% of the generated staking rewards will cover operational costs, with the remainder distributed directly to shareholders as additional returns. This approach leverages Avalanche’s efficient proof-of-stake consensus, where staked AVAX secures the network and earns rewards typically ranging from 7-10% annually, based on network participation rates reported by Avalanche Foundation data.

Experts note that this staking integration differentiates the fund from traditional ETFs by blending passive investment with active yield farming under regulatory oversight. Market analysts from firms like Bloomberg Intelligence have highlighted that such mechanisms could boost investor appeal, provided the SEC addresses custody and taxation concerns. The plan ensures that staking activities comply with U.S. securities laws, minimizing downtime risks through diversified validator selection.

Frequently Asked Questions

What Are the Fee Details for the Bitwise Avalanche ETF?

The Bitwise Avalanche ETF proposes a sponsor fee of 0.34%, which is more competitive than VanEck’s 0.40% and Grayscale’s 0.50% for similar products. A one-month fee waiver applies to the first $500 million in assets under management, reducing initial costs for early investors. These terms, outlined in the SEC filing, support the fund’s listing on NYSE Arca and aim to attract institutional capital.

Who Handles Custody for the Bitwise Avalanche ETF Assets?

Coinbase Custody Trust Company will serve as the primary custodian for all AVAX tokens in the Bitwise Avalanche ETF, ensuring secure storage and compliance with SEC requirements. BNY Mellon, a leading global financial institution, will manage cash equivalents and handle related transactions. This dual-custody model separates digital assets from fiat, reducing counterparty risks and aligning with best practices recommended by regulatory bodies like the SEC.

Key Takeaways

• Staking Innovation: The 70% AVAX staking plan introduces yield generation, potentially offering 7-10% annual returns distributed to shareholders after operational deductions.
• Cost Efficiency: At 0.34% fees with an initial waiver, the ETF undercuts competitors, making it accessible for retail and institutional investors alike.
• Risk Management: Expanded disclosures cover IRS staking tax rules, quantum threats, and liquidity issues, demonstrating Bitwise’s commitment to transparency ahead of approval.

Regulatory Positioning and Broader Implications

The Bitwise Avalanche ETF amendment reflects ongoing adaptations in the crypto ETF landscape, building on initial filings submitted in September alongside competitors like VanEck and Grayscale. This update aligns with recent IRS guidance on taxing staking rewards as ordinary income, ensuring the fund’s structure fits within established tax frameworks. By referencing the CME CF Avalanche-Dollar Reference Rate for pricing, Bitwise provides a reliable benchmark that mirrors spot AVAX performance, crucial for accurate net asset value calculations.

Risk disclosures have been bolstered to address emerging challenges, including potential network vulnerabilities and the long-term impact of quantum computing on blockchain security. According to insights from cybersecurity experts at Chainalysis, such proactive measures are essential for gaining SEC confidence. The filing also details seeding the ETF with 100,000 shares worth $2.5 million, signaling Bitwise’s readiness for launch if approved.

This development underscores the maturation of crypto investment vehicles in the U.S., where staking adds a layer of utility beyond mere price speculation. As Avalanche’s ecosystem grows—with over 1 million validators and daily transaction volumes exceeding $1 billion, per on-chain data—the ETF could channel significant capital into the network. Financial analysts from JPMorgan have observed that approved staking ETFs might accelerate mainstream adoption, potentially influencing other blockchains to pursue similar products.

Conclusion

The amended Bitwise Avalanche ETF filing, with its 70% staking allocation and refined fee structure, represents a forward-thinking approach to crypto ETFs, balancing yield opportunities with regulatory compliance. By incorporating custody from trusted providers like Coinbase and BNY Mellon, and addressing key risks through IRS-aligned disclosures, Bitwise strengthens its case for SEC approval. Investors should monitor these updates closely, as they could pave the way for innovative, income-generating crypto funds that enhance portfolio diversification in the evolving digital asset market.