VanEck Registers AVAX ETF Analysis

Background and Key Developments

On March 15, 2025, global asset management giant VanEck submitted a 19b-4 filing for a spot AVAX ETF to the U.S. Securities and Exchange Commission (SEC), becoming the first institution to apply for a spot ETF for Avalanche (AVAX). This move is seen as an important milestone in the process of crypto asset compliance, but it also faces significant regulatory hurdles — the SEC has previously hinted that it might classify AVAX as an unregistered security, and the “delegated staking” model in its underlying consensus mechanism (Avalanche protocol) has sparked compliance debates.

According to public documents, VanEck plans to issue the ETF through its subsidiary MVIS, with AVAX assets held in custody by Coinbase Custody, and to use Chainlink’s reserve proof technology to ensure transparency. If approved, the ETF would become the third compliant spot crypto ETF after Bitcoin and Ethereum, with a potential management scale that could exceed USD 2 billion. However, the market widely believes that the SEC’s approval stance will be extremely cautious, especially as the recently promoted “Crypto Asset Classification Act” by the Trump administration has yet to clarify the legal status of AVAX.

Compliance Challenges and Regulatory Battles

VanEck’s application faces three core challenges:

• Token Classification: Determining whether AVAX is a security remains a major hurdle.
• Staking Model Compliance: The delegated staking mechanism, whereby users delegate tokens to validators for rewards, may trigger registration requirements under Section 5 of the Securities Act.
• Market Manipulation Risk: AVAX’s market liquidity is concentrated on a few exchanges (such as Binance and Coinbase), and the SEC may be concerned that its price could be easily manipulated, referencing previous “monitoring and sharing protocol” requirements in Bitcoin ETF approvals.

Despite these obstacles, VanEck’s attempt is strategically significant. Its legal team cites precedents from the Ripple case, arguing that AVAX, as a functional token used for paying gas fees and for governance voting, should not be classified as a security. Simultaneously, the Avalanche Foundation has launched a “compliance staking pilot,” collaborating with New York trust institutions to develop staking services that meet SEC requirements, in an effort to dispel regulatory concerns. If VanEck succeeds, it could pave the way for ETFs on PoS tokens like Solana (SOL) and Cardano (ADA).

Market Impact and Industry Ripple Effects

Following the announcement of the AVAX spot ETF application, AVAX’s price experienced little change. Despite the stimulus from the ETF news, market speculative sentiment was far less intense compared to the earlier SOL ETF hype. Analysts warn of the “buy on expectation, sell on reality” risk — if the SEC delays approval or explicitly rejects the application, the price could further retract.

In the long run, if the ETF is approved, it will profoundly alter the holder structure of AVAX. Currently, retail investors hold about 65% of the circulating tokens, but the ETF could attract long-term capital from pension funds and family offices. This transformation might reduce market volatility but could also weaken community governance participation (since institutional investors tend to hold passively). Additionally, DeFi protocols within the Avalanche ecosystem (such as Trader Joe and Benqi) could benefit from increased liquidity, though their tokenomics may need adjustment to accommodate large institutional inflows.

Future Outlook and Strategy Recommendations

Market opinions on the SEC’s decision timeline vary:

• Optimistic Expectation: If the Trump administration accelerates its crypto-friendly policies, the SEC may approve the ETF in Q4 2025, potentially driving AVAX to around USD 50.
• Neutral Expectation: The approval process might take 12–18 months, during which prices may oscillate in the USD 15–30 range.
• Pessimistic Risk: The SEC might invoke the “Howey Test” to reject the application, potentially causing AVAX to drop to the USD 10 support level.

For investors, in the short term, attention should be paid to changes in AVAX staking rates and the SEC’s public statements, while in the long term, monitoring the technological iterations and compliance progress of the Avalanche ecosystem is crucial. Under a dynamic balance between regulation and innovation, VanEck’s ETF attempt not only represents an opportunity for market expansion but also serves as a stress test for integrating crypto assets into the mainstream financial system.