Summary:
- Grayscale Investments has filed with the SEC to convert its Aave trust into an exchange-traded fund.
- The proposed product, the Grayscale Aave Trust ETF, would trade on NYSE Arca under the ticker "GAVE."
- Coinbase will act as custodian and prime broker, and the fund would charge a 2.5% fee.
- Grayscale becomes the second firm after Bitwise Asset Management to seek US approval for an Aave-focused ETF.
Grayscale Investments is taking another step deeper into the altcoin ETF market, filing with the U.S. Securities and Exchange Commission to convert its existing Aave trust into a fully fledged exchange-traded fund. On Friday, the firm submitted a Form S-1 registration statement to the SEC stating its intention to transform the trust into the Grayscale Aave Trust ETF. If approved, the product would be listed on NYSE Arca under the ticker symbol "GAVE." A well known researcher shared a post summarizing the filing, it was noted:
According to the filing, the ETF would charge a 2.5% management fee. Coinbase would serve as both custodian and prime broker for the fund, a structure that mirrors arrangements used in other crypto-linked ETFs. Grayscale's proposed ETF would hold AAVE tokens directly and that approach offers investors straightforward exposure to the asset itself. The move reflects Grayscale's continued strategy of converting its single-asset crypto trusts into ETFs, following the broader wave of spot crypto ETF approvals that reshaped the U.S. digital asset investment face.
Aave's Growing Institutional Profile
The token at the center of this filing belongs to Aave, currently the largest decentralized finance (DeFi) lending protocol by total value locked. According to data from DefiLlama, Aave holds more than $27 billion+ in total value locked across multiple blockchains. Aave operates as a decentralized lending platform where users can deposit crypto assets to earn interest or borrow against their holdings. The AAVE token plays a governance role in the protocol and can be staked to earn yield, giving it both utility and income-generating potential within the ecosystem.
For traditional investors, however, directly interacting with DeFi protocols can be complex. Like managing private wallets, navigating smart contracts, and understanding on-chain risks often present barriers. An ETF structure simplifies that process by allowing investors to gain exposure through standard brokerage accounts. Grayscale's filing suggests that institutional appetite for altcoins remains intact, even amid broader market volatility. While Bitcoin and Ethereum products have dominated headlines, asset managers appear increasingly willing to explore funds tied to other major digital assets. But this filing signals a broader trend in which asset managers are betting that Wall Street still sees value in diversified crypto exposure.
Grayscale and Bitwise Compete in Aave ETF Race
With its application, Grayscale becomes the second firm to pursue regulatory approval for a U.S.-listed ETF tied to Aave. Bitwise Asset Management previously filed in December to launch the Bitwise AAVE Strategy ETF.
Bitwise's proposal differs in structure because its ETF plans to allocate up to 60% of assets directly into AAVE tokens and at least 40% into securities, such as other ETFs that have exposure to AAVE. So, Grayscale's fund would hold AAVE tokens directly, offering more concentrated exposure. Bitwise's December filing was part of a broader push to introduce ETFs tied to multiple altcoins, including Uniswap and Zcash. That regulatory momentum around spot crypto ETFs could extend beyond Bitcoin and Ethereum.
The race between Grayscale and Bitwise also reflects a familiar pattern. In previous crypto ETF cycles, multiple asset managers have filed similar products, often competing on structure, fees, and branding to capture early market share. Grayscale's proposed 2.5% fee sits on the higher end compared to some newer crypto ETFs, but the firm has historically leveraged its brand recognition and established investor base to maintain strong inflows. If approved, the Grayscale Aave Trust ETF would provide another bridge between decentralized finance and traditional capital markets. It would also mark another milestone in the normalization of altcoin exposure within regulated financial products.
For Aave itself, the ETF push represents a new chapter. Once seen primarily as a crypto-native lending protocol, it is now the subject of competing ETF filings from two major U.S. asset managers.
Closing Thoughts
Whether regulators greenlight one, both, or neither product remains to be seen. What is clear, however, is that institutional interest in altcoins has not disappeared. Also it seems to be evolving, shifting from experimental exposure toward more structured, exchange-traded vehicles. As Wall Street continues to weigh risk and opportunity in digital assets, Aave has moved firmly into the conversation.
READ MORE: NIGHT Is Now Live on COTI : Here's Why That Matters for Its Ecosystem