Grayscale Seeks SEC Approval to Convert Aave Trust into an ETF
Crypto asset manager Grayscale has lodged a formal request with the U.S. Securities and Exchange Commission to turn its existing Aave‑focused trust into a registered exchange‑traded fund.
filing details
- Regulatory filing: A Form S‑1 registration statement was submitted to the SEC on Friday, outlining Grayscale’s intention to restructure the current Grayscale Aave Trust as an exchange‑traded fund.
- Proposed name & ticker: The new vehicle would be called the Grayscale Aave Trust ETF and trade under the ticker GAVE on the NYSE Arca exchange, a platform widely used for ETF listings.
- Management and fees: The fund would charge a management fee of 2.5 % per annum. Coinbase has been named both the custodian and the prime brokerage provider for the product.
- Underlying holdings: Unlike many crypto‑linked ETFs that blend token exposure with securities, Grayscale plans to hold AAVE tokens directly within the fund’s portfolio.
market context
Aave remains the leading decentralized‑finance (DeFi) protocol by total value locked, with more than $27 billion across multiple blockchains, according to DeFi analytics platform DeFi Llama. The native AAVE token is used for lending, borrowing, and staking activities that generate yield for participants. Over the past 24 hours the token slipped about 1.6 % to roughly $126, still sitting roughly 80 % below its all‑time high of just under $662 reached in May 2021.
competition in the U.S. Aave‑ETF space
Grayscale is not alone in pursuing a listed product tied exclusively to AAVE. Bitwise filed a separate SEC request in December for the Bitwise AAVE Strategy ETF. Bitwise’s structure would allocate up to 60 % of assets to the token itself, with the remaining 40 % placed in traditional securities that provide indirect exposure to AAVE. By contrast, Grayscale’s proposal seeks a pure‑token holding model.
Both filings would represent the first U.S.‑listed ETFs focused solely on Aave, joining a short list of overseas offerings that have already entered the market:
- 21Shares launched an Aave‑linked exchange‑traded product on Nasdaq Stockholm in November 2025.
- Global X introduced a similar product on a German exchange in early 2023.
regulatory and industry implications
The SEC’s decision on these applications will be a key indicator of how U.S. regulators view direct crypto‑token ETFs. Earlier this year, the agency approved spot bitcoin ETFs but has been more cautious with altcoin‑centric products, citing concerns around market manipulation and custody. Grayscale’s partnership with Coinbase—a regulated U.S. crypto custodian—could be viewed favorably in addressing those concerns.
From an industry perspective, the filings underscore that institutional demand for crypto exposure persists despite the broader market downturn. An ETF with a 2.5 % expense ratio is competitive relative to other crypto‑themed funds, many of which charge between 0.75 % and 1.5 % for more diversified baskets, but the higher fee reflects the added operational costs of direct token custody and compliance.
analyst take‑aways
| Take‑away | Explanation |
|---|---|
| Regulatory scrutiny remains high | The SEC is likely to evaluate the fund’s custody arrangements, market surveillance mechanisms, and the ability to prevent price manipulation. |
| Direct token exposure vs. hybrid models | Grayscale’s all‑in‑AAVE approach offers pure price exposure, which may appeal to investors seeking unfiltered crypto returns, while Bitwise’s blended strategy could attract those preferring a more traditional ETF structure. |
| Fee considerations | At 2.5 %, the expense ratio is above the average for crypto ETFs, potentially limiting appeal unless the fund can demonstrate superior tracking or added services. |
| Market demand persists | The simultaneous filings indicate that, even in a bear market, asset managers are betting on continued investor appetite for altcoin‑specific products. |
| International precedent | Success of European Aave ETFs may bolster the case for U.S. approval, showing that similar products can operate under existing regulatory frameworks abroad. |
outlook
If approved, the Grayscale Aave Trust ETF would launch as one of the first U.S.‑listed funds to give investors direct exposure to a DeFi protocol token. The fund could become a bellwether for future altcoin‑based ETFs, informing both regulators and asset managers about the viability of such products. Until the SEC renders a decision—expected later this year—market participants will be watching closely for any indications of the agency’s stance on direct crypto token ETFs.
Source: https://cointelegraph.com/news/grayscale-files-convert-aave-trust-etf-launch-nyse-arca?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
