Grayscale Investments filed an S-1 to convert the Grayscale Bittensor Trust into a spot ETF that would trade on NYSE Arca under the ticker GTAO. The filing, submitted around December 30, 2025, is designed to make TAO easier to access for both institutions and retail investors, pending SEC approval.
The move comes shortly after Bittensor’s December 2025 halving and is framed as a way to reduce the custody and liquidity frictions that have limited broader participation in decentralized AI tokens. The timing links a key network supply event with an effort to wrap TAO exposure in a more familiar, regulated structure.
Grayscale files another cryptocurrency ETF, conversion from existing fund
Grayscale Bittensor Trust (TAO)
Ticker: [ $GTAO ]
Fees: [ 2.50% ]
Effective date: tbaGrayscale Bittensor Trust:https://t.co/9vWmrMQtYN
Bittensor:https://t.co/WTpLEAdldo
Grayscale ETFs:… pic.twitter.com/amUTmH1wA0
— ETF Hearsay by Henry Jim (@ETFhearsay) December 30, 2025
How the ETF Would Work Operationally
The proposed ETF is structured as a Delaware statutory trust and uses a hybrid creation and redemption model geared toward institutional workflows. Authorized participants could create or redeem shares either by depositing TAO in-kind into BitGo Trust’s custody or by submitting cash orders routed through Coinbase as prime broker.
The filing also lays out the core service providers and valuation plumbing. The Bank of New York Mellon is listed as administrator and transfer agent, and daily NAV would be calculated using the TAO CCIXber Reference Rate with fallback protocols intended to protect price integrity. In practice, the structure aims to standardize the operational touchpoints that typically slow allocations in newer token markets. The goal is fewer custody handoffs and a clearer reference price for reconciliation.
Grayscale also included explicit operational guardrails tied to tax and trust mechanics. Staking is suspended pending IRS guidance on grantor-trust tax treatment, and the trust would irrevocably give up rights to tokens from forks or airdrops to preserve its tax status. These provisions simplify trust administration, but they also define what investors do not receive. The product prioritizes regulatory and tax clarity over maximizing token-native entitlements.
What Could Move Next
The filing highlights TAO’s near-term risk and portfolio positioning characteristics, including elevated volatility and low correlation to traditional assets. It cites a 30-day volatility figure of 50.46% and frames low correlation as a potential draw for allocators seeking diversification. The halving context is also central: Bittensor’s December 2025 halving cut daily TAO emissions by roughly 50%, reinforcing the supply-side backdrop referenced around the application.
Regulatory review remains the primary gating factor. SEC scrutiny is expected to focus on custody design, valuation methodology for a novel AI-token, and governance practices, with competing managers filing similar altcoin ETF applications. For markets, that competitive pressure matters because it signals a broader industry push to turn token exposure into equity-style wrappers. Approval dynamics will likely set the pace for how quickly liquidity and institutional participation can scale.
The practical trade-off is clear. The structure offers cleaner custody routing and easier brokerage-based allocation, but staking is excluded for now and fork/airdrop rights are explicitly relinquished. If the ETF is approved, it could meaningfully reduce custody friction and deepen liquidity for TAO. The real test will be whether the creation/redemption mechanics actually shorten settlement timelines and reduce operational steps for institutional participants.
