SEC postpones decision on Grayscale’s Avalanche and Cardano ETFs
The U.S. Securities and Exchange Commission (SEC) has decided to delay its ruling on Grayscale’s proposals for Avalanche (AVAX) and Cardano (ADA) exchange-traded funds (ETFs). This postponement was announced officially on May 29, 2025, with the SEC indicating that further evaluation of the applications was necessary, leading to extended public comment and rebuttal periods.
Grayscale, a major player in the crypto asset management space, had been seeking approval for new spot ETFs linked to specific cryptocurrencies after the recent successful launch of Bitcoin spot ETFs. Their focus had shifted towards Avalanche (AVAX) and Cardano (ADA), two prominent layer-1 blockchain assets. Grayscale’s intention was to list these ETFs on the Nasdaq, offering traditional investors exposure to AVAX and ADA without the need to directly own or manage the digital tokens.
In light of the SEC’s decision to delay the ruling, the public comment period will now conclude 21 days after publication in the Federal Register, followed by a 35-day rebuttal period for additional responses. This move shines a spotlight on the SEC’s cautious approach towards crypto-backed exchange-traded products (ETPs), particularly those extending beyond Bitcoin.
The reluctance of the SEC to expand approved crypto ETFs beyond Bitcoin is evident, with altcoin ETFs, covering assets like Ethereum, Solana, Avalanche, and Cardano, encountering regulatory uncertainty. Specific concerns such as market manipulation risks, liquidity challenges, and the accurate valuation of altcoin assets have contributed to the SEC’s cautious stance. Furthermore, the unclear regulatory classification of various cryptocurrencies under U.S. securities laws continues to impact decision-making in this space.
The subsequent impact of the SEC’s delay on AVAX and ADA prices was modest, with minor price fluctuations observed post-announcement. Institutional investors, familiar with the SEC’s cautious approach towards crypto funds, are in a state of suspense, awaiting clarity on regulations before increasing their exposure to altcoin-backed ETPs. This delay further accentuates the prevailing regulatory ambiguity in the U.S. crypto investment field.
Looking ahead, Grayscale will navigate an extended waiting period as it addresses potential SEC concerns through supplementary filings and public commentary. Key areas the company will likely focus on include robust custody and security arrangements for digital assets, comprehensive market surveillance mechanisms, and transparent asset valuation methodologies. Success in tackling these challenges will be pivotal for Grayscale’s prospects of approval later in 2025 or early 2026.
The decision to delay Grayscale’s ADA and AVAX ETFs aligns with the broader regulatory landscape surrounding U.S. crypto regulations. Drawing parallels to the prolonged approval process for Bitcoin spot ETFs and the ongoing evaluation of Ether ETFs, expectations are that altcoin ETF applications for assets like Solana and Ripple could face similar hurdles and extended timelines. This highlights the widening regulatory divergence between the U.S. and other markets like Hong Kong, Canada, and parts of Europe, where multi-asset and single-token crypto ETFs have already seen significant capital inflows.
In conclusion, the SEC’s postponement of Grayscale’s Avalanche and Cardano ETFs speaks to the overarching regulatory challenges that persist in the U.S. crypto market, emphasizing the need for clear guidelines to drive investor confidence and market growth.
