VanEck Updates Avalanche ETF Filing to Add Staking Rewards and Income Generation

VanEck has amended its filing with the U.S. Securities and Exchange Commission (SEC) for a proposed Avalanche exchange-traded fund (ETF), introducing staking as a core feature designed to generate additional income for investors. The ETF, which would trade under the ticker VAVX on Nasdaq if approved, reflects a growing trend among crypto asset managers to incorporate yield-generating mechanisms into spot crypto ETFs.

According to the updated S-1 registration statement, VanEck plans to stake up to 70% of the fund’s AVAX holdings to earn staking rewards on the Avalanche blockchain. Coinbase Crypto Services has been named as the initial staking provider, highlighting the firm’s reliance on established and regulated crypto infrastructure providers. Any staking rewards generated would accrue directly to the fund, minus a 4% service fee charged by Coinbase, and would be reflected in the ETF’s net asset value (NAV), potentially enhancing long-term returns for investors.

The filing also emphasizes strong custody and risk management practices. VanEck stated that the AVAX tokens held by the ETF would be stored with regulated custodians, including Anchorage Digital and Coinbase Custody. Both custodians utilize offline cold storage solutions, a standard security measure intended to reduce exposure to hacks and operational risks.

Importantly, the proposed Avalanche ETF will not employ leverage or derivatives, aligning it with the structure of traditional spot crypto ETFs. Instead, the fund will track the price of AVAX using the MarketVector Avalanche Benchmark Rate, a custom index designed to reflect market prices across several major cryptocurrency exchanges. This approach aims to provide transparent and reliable price tracking for investors seeking direct exposure to Avalanche.

VanEck’s move follows similar developments in the market. Last month, asset manager Bitwise updated its own spot Avalanche ETF filing to allow for yield generation, signaling increasing competition and innovation in crypto ETF products. As regulatory scrutiny around digital assets continues, these filings suggest that issuers are working to balance compliance, investor protection, and enhanced returns.

If approved, VAVX could mark a significant step forward for crypto ETFs by combining price exposure with staking-based income, potentially making Avalanche ETFs more attractive to both institutional and retail investors.