Crypto Journalist
Anas Hassan
Crypto Journalist
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Grayscale Investments filed a Form S-1 registration statement with the SEC on December 30 for the Grayscale Bittensor Trust ETF, seeking to transition its existing over-the-counter product to a NYSE Arca listing under the ticker GTAO.
The filing positions Grayscale to offer regulated exposure to TAO, the native token of Bittensor’s decentralized AI marketplace, through a passive investment vehicle holding digital assets valued at $7.97 million as of December 31.
The trust currently trades on OTCQX with 1.88 million shares outstanding and charges a 2.5% total expense ratio while maintaining 0.0192 TAO per share.
Grayscale structured the product as a Delaware statutory trust formed in April 2024, with shares issued in 10,000-unit baskets exclusively through authorized participants who create or redeem holdings using either in-kind TAO deposits or cash orders executed by liquidity providers.
Hybrid Creation Mechanism Targets Institutional Access
The filing detailed two distinct order types enabling authorized participants to facilitate share creation and redemption.
In-kind orders allow broker-dealers to deposit TAO directly into BitGo’s custody vault or withdraw assets during redemptions.
In contrast, cash orders utilize Coinbase as a prime broker to execute purchases on behalf of participants through segregated accounts.
Cash transactions employ either variable-fee structures, in which liquidity providers absorb price differentials, or actual execution orders that place price risk on authorized participants between trade-date NAV and final settlement values.
The trust calculates net asset value daily at 4:00 PM Eastern using the CoinDesk TAO CCIXber Reference Rate, with cascading backup protocols that default to the Coin Metrics Real-Time Rate or Coinbase spot pricing if the primary index becomes unavailable.
BNY Mellon serves as administrator and transfer agent, while Coinbase Custody Trust Company handles digital asset safekeeping alongside BitGo, though the trust currently prohibits staking activities pending IRS guidance on grantor trust tax treatment.
Grayscale committed to irrevocably abandoning rights to tokens from network forks or airdrops to preserve the structure’s tax classification, potentially forfeiting future value from protocol upgrades.
European ETP Wave Signals Broader Altcoin ETF Competition
The Grayscale filing arrives as Deutsche Digital Assets and Safello launched the Safello Bittensor Staked TAO ETP on SIX Swiss Exchange in October, offering 1.49% fee exposure to staking rewards through the Kaiko Safello Staked Bittensor Index.
That product generated immediate institutional interest, as TAO rallied 42% in October to $427.59, though the token has since declined to current levels amid broader crypto market year-end outflows.
Bitwise simultaneously filed for eleven strategy-based crypto ETFs on December 30, including a dedicated TAO product alongside funds tracking AAVE, UNI, NEAR, SUI, STRK, ZEC, ENA, and other protocols.
The wave of applications followed the SEC’s October 2025 introduction of generic listing standards, which eliminated case-by-case approval requirements and accelerated institutional product launches across formerly restricted altcoin markets.
Speaking with Cryptonews, Ray Youssef, CEO of NoOnes, noted that altcoin ETF launches are “colliding with tight liquidity, low investor confidence and pronounced market underperformance,” but argued new listings “create a steady inflow channel that can serve as a liquidity buffer.”
Ending 2025, XRP ETFs posted six consecutive days of inflows exceeding $420 million, while Solana products attracted $2.29 million on December 31 even as Bitcoin and Ethereum ETFs recorded combined outflows of $420 million that session.
Despite immediate market headwinds, Grayscale’s filing positions the firm to capture institutional demand once macro conditions stabilize.
The trust’s net asset value declined 51.6% year-over-year to $4.24 per share as of December 31, trading at a 124% premium to NAV at $9.50 market price.
Notably, the filing disclosed risks, including TAO’s historical volatility ranging from $188.82 to $709.06 annually, potential SEC classification that could force liquidation, and irreversible custody losses from compromised private keys despite multi-signature cold storage protocols across geographically distributed facilities.
