Grayscale Files for Bittensor Spot ETF Under GTAO

Summary: Grayscale Investments has submitted a registration statement with the SEC for its Bittensor Trust ETF, transitioning from an over-the-counter product to trade on NYSE Arca with the ticker GTAO. This move aims to provide regulated access to the TAO token, acting as a passive investment vehicle.

Key Takeaways

Grayscale filed for the Bittensor Trust ETF on Dec 30, seeking a NYSE Arca listing under the ticker GTAO.
The trust currently has $7.97 million in digital assets and trades on the OTCQX market.
It includes a unique hybrid creation mechanism to facilitate institutional access.
Recent European ETP launches suggest increased competition in the altcoin ETF market.
Risks include TAO's market volatility and potential SEC regulations impacting trust liquidity.

Grayscale Files for Bittensor Spot ETF Under GTAO

Grayscale’s Bittensor Trust ETF Overview

Grayscale Investments has filed a Form S-1 registration statement with the SEC on December 30, looking to launch the Grayscale Bittensor Trust ETF. This filing is aimed at converting its current over-the-counter product into a regulated entity on NYSE Arca, under the ticker symbol GTAO.

This filing enhances Grayscale's capacity to offer regulated exposure to TAO, the native token of Bittensor’s decentralized AI marketplace. As of December 31, the trust manages a digital asset portfolio valued at $7.97 million.

Currently, the trust is traded on OTCQX, with 1.88 million shares outstanding. It has a total expense ratio of 2.5% and maintains 0.0192 TAO for each share held.

Grayscale has structured the product as a Delaware statutory trust created in April 2024. Shares are issued in baskets of 10,000 units exclusively through authorized participants. These participants can create or redeem shares using in-kind TAO deposits or cash orders processed by liquidity providers.

Innovative Share Creation Mechanics

Facilitating Institutional Access

Grayscale's registration details two different order types for authorized participants to manage share creation and redemption.

In-kind orders allow broker-dealers to deposit TAO directly into BitGo's custody vault or withdraw assets during redemption events.

On the other hand, cash orders involve Coinbase acting as a prime broker to execute purchases on behalf of participants through segregated accounts.

Cash transactions can be structured with variable fees, where liquidity providers cover price differences, or through actual execution orders, which carry price risk for authorized participants from trade-date NAV to the final settlement value.

The trust calculates its net asset value (NAV) daily at 4:00 PM ET, using the CoinDesk TAO CCIXber Reference Rate. If this primary index is unavailable, fallback measures involve using either Coin Metrics Real-Time Rate or Coinbase spot pricing.

For asset custody, BNY Mellon serves as the administrator and transfer agent, with Coinbase Custody Trust Company and BitGo providing digital asset safekeeping. Notably, the trust has temporarily halted staking activities while awaiting IRS guidance on grantor trust tax implications.

To maintain tax classification, Grayscale has promised to relinquish any rights to tokens from network forks or any airdrops, risking future value from protocol upgrades.

Competitive Dynamics in the Altcoin ETF Market

European Trends and New Entrants

Grayscale's filing coincides with recent activity in the altcoin ETF space, such as the launch of the Safello Bittensor Staked TAO ETP by Deutsche Digital Assets and Safello on the SIX Swiss Exchange in October. This new ETP offers a 1.49% fee exposure to staking rewards, contributing to immediate institutional interest. During October, TAO prices surged by 42%, reaching $427.59, but have since dropped amid broader market trends.

Additionally, Bitwise has submitted filings for eleven strategy-focused crypto ETFs on the same day, including a dedicated TAO product. This surge in applications follows the SEC's introduction of standardized listing requirements in October 2025, hastening institutional products' development in previously restricted altcoin markets.

Describing the situation, Ray Youssef, CEO of NoOnes, mentioned that altcoin ETF launches are facing issues like "tight liquidity and low investor confidence," but he believes that new listings can provide a stable inflow channel, acting as a liquidity cushion.

As 2025 closes, XRP ETFs experienced six consecutive days with inflows surpassing $420 million. In the same period, Solana products attracted $2.29 million, even as Bitcoin and Ethereum ETFs faced outflows of $420 million.

Grayscale Bittensor Spot ETF - Bitcoin Net Inflow Chart

Despite facing immediate market challenges, Grayscale's filing positions the firm well to capture institutional interest when market conditions improve.

However, the trust’s NAV saw a decline of 51.6% year-over-year, reaching $4.24 per share by December 31, and is trading at a price premium of 124% to the NAV at $9.50 per share. The filing also outlined significant risks, including TAO's historical price fluctuations, potential SEC reclassifications that could necessitate liquidation, and the risk of asset loss due to compromised private key security, even with multi-signature cold storage measures in place.