Grayscale files with SEC to convert Aave trust into exchange-traded fund providing U.S. investors regulated access to AAVE tokens

Crypto asset manager Grayscale Investments is taking a major step toward expanding U.S. crypto offerings by filing for regulatory approval to convert its Aave trust into an exchange-traded fund (ETF).

The move was formalized through a Form S-1 registration statement submitted to the U.S. Securities and Exchange Commission (SEC) on Friday.

Once approved, the new fund will be called the Grayscale Aave Trust ETF and is expected to trade on NYSE Arca under the ticker symbol “GAVE.”

The fund will charge a management fee of 2.5%, and Coinbase will act as both custodian and prime broker for the ETF.

---

Aave and the Growing Altcoin ETF Market

Aave (AAVE) is the largest decentralized finance (DeFi) protocol, boasting over $27 billion in total value locked, according to DefiLlama.

The platform allows users to lend and borrow crypto across multiple blockchains, and AAVE tokens can be staked to earn yield.

Grayscale’s move is part of a broader trend of altcoin-focused ETFs, signaling that Wall Street still sees value in crypto exposure, even as markets struggle.

Other crypto asset managers, like Bitwise Asset Management, have filed similar ETF proposals, showing continued investor appetite for regulated crypto products.

---

Grayscale Joins Bitwise in the Aave ETF Race

Grayscale is now the second U.S. firm to file for an Aave-focused ETF, following Bitwise, which submitted its filing in December for the Bitwise AAVE Strategy ETF.

Bitwise’s ETF is designed to hold up to 60% of assets directly in AAVE tokens and at least 40% in related securities, whereas Grayscale’s ETF would hold AAVE tokens directly.

These two ETFs would become the first U.S.-based products providing direct exposure to Aave, adding to a small but growing list of international offerings.

For context, European firms like 21Shares and Global X have already launched exchange-traded products tracking AAVE in Stockholm and Germany, respectively.

---

AAVE Token Performance

The AAVE token has seen significant volatility over the years.

Currently trading at around $126, it has fallen more than 80% from its all-time high near $662, reached in May 2021 during a major altcoin bull run, according to CoinGecko.

Over the past 24 hours, the token is down about 1.6%, reflecting ongoing market uncertainty for crypto investors.

---

What’s Next?

Approval by the SEC will be the next critical step for Grayscale.

If successful, U.S. investors would gain regulated, easy access to Aave through a traditional brokerage account.

Market watchers will also be watching whether Bitwise or other firms follow with additional altcoin ETFs, potentially including tokens like Uniswap (UNI) or Zcash (ZEC).

The launch could increase institutional participation in AAVE, provide more liquidity for the token, and encourage broader adoption of DeFi-focused investment products.

Investor interest may hinge on both market conditions and regulatory clarity, as the SEC has historically been cautious with altcoin ETFs.

---

Summary

Grayscale Investments has filed to convert its Aave trust into an ETF, potentially creating the Grayscale Aave Trust ETF on NYSE Arca under the ticker “GAVE.”

This fund would hold AAVE tokens directly and charge a 2.5% management fee, with Coinbase as custodian and prime broker.

The filing positions Grayscale as the second U.S. firm after Bitwise to pursue an Aave-focused ETF, adding to a small but growing market of regulated altcoin products.

With AAVE’s price down more than 80% from its all-time high, the ETF could provide a safer, regulated avenue for investors seeking exposure to the leading DeFi protocol.

The next step is SEC approval, which could open the door to increased institutional participation and more altcoin ETFs in the United States.