Grayscale Files to Convert AAVE Token Trust into ETF for NYSE Arca Listing

TLDR

• Grayscale seeks SEC approval to convert its AAVE token trust into an ETF.
• AAVE’s market cap stands at $1.8 billion, with a token price of $119.
• Grayscale aims for NYSE Arca listing with a proposed 2.5% sponsor fee on NAV.
• Coinbase will act as custodian for Grayscale’s AAVE ETF offering.

Grayscale has formally submitted a request to the Securities and Exchange Commission (SEC) to convert its closed-ended AAVE trust into an exchange-traded fund (ETF). The proposed ETF would be listed on the NYSE Arca market. This move signals Grayscale’s continued efforts to expand its crypto investment products following its successful conversion of its Bitcoin Trust into a spot Bitcoin ETF.

The AAVE token, which is the native asset of the Aave protocol, currently holds a market cap of approximately $1.8 billion. At the time of this filing, the token’s price is about $119, showing a notable 9% increase on the day, according to data from The Block. AAVE reached an all-time high of $661.69 in April 2021, showcasing its historical performance in the cryptocurrency space.

Grayscale’s Push to Expand Its ETF Portfolio

Grayscale’s decision to file for the AAVE ETF conversion follows the success of its Bitcoin Trust. The company has already transitioned several of its closed-ended funds into ETFs, with its spot Bitcoin ETF being one of the most prominent examples. This legal victory with the SEC regarding the Bitcoin Trust opened the door for other crypto products, including spot Bitcoin ETFs, to potentially be offered in the U.S. market.

Grayscale is positioning itself to capture further market interest in DeFi assets, and AAVE presents a solid opportunity. The token is known for its significant role in the decentralized finance (DeFi) space, particularly as the native token of the Aave protocol. Aave has established itself as a leading decentralized lending platform, with growing demand for related financial products.

AAVE ETF Features and Structure

The proposed AAVE ETF would have a 2.5% sponsor fee on its net asset value (NAV), which would be payable in AAVE tokens. The use of AAVE for fees aligns with the asset’s core functionality within the DeFi ecosystem. Additionally, Grayscale has selected Coinbase as both the custodian and prime broker for the AAVE ETF. Coinbase’s role ensures the safety and handling of the tokens within the fund, adhering to industry standards for digital asset custodianship.

This move comes amid increasing interest in crypto-related ETFs, particularly those focused on individual tokens like AAVE. While other firms, such as Bitwise, have also made similar filings for AAVE ETFs, Grayscale’s reputation in the space positions it as a prominent player. Grayscale’s ability to convert its existing trusts into ETFs could set a precedent for other crypto assets, should the SEC approve the AAVE ETF filing.

The Competitive Landscape for AAVE ETF Listings

While Grayscale’s filing is notable, it faces competition from other asset managers who are also pursuing similar crypto ETF products. In December 2025, Bitwise submitted applications for 11 separate crypto-focused ETFs, including one for AAVE.

This competition adds pressure on Grayscale as it seeks to become one of the first to offer an AAVE ETF in the U.S. However, the outcome of these filings remains uncertain, as the SEC continues to review the viability of such products.

With the regulatory landscape for cryptocurrency assets evolving, the approval of Grayscale’s AAVE ETF could be a milestone in the broader acceptance of DeFi-related investment vehicles. The approval process will likely involve thorough scrutiny, especially as regulators assess the unique characteristics of AAVE and other DeFi assets compared to traditional financial products.

What’s Next for Grayscale and the AAVE Token?

The next steps for Grayscale hinge on the SEC’s response to its filing. If approved, the AAVE ETF could provide a more traditional investment avenue for those looking to gain exposure to the Aave protocol without directly holding the token. The potential success of this ETF could pave the way for further adoption of DeFi assets in the financial mainstream, creating opportunities for both investors and asset managers.

As the crypto industry continues to grow, products like the Grayscale AAVE ETF may become more common, offering a bridge between traditional finance and the emerging DeFi space. The full approval and eventual listing of the AAVE ETF would signal an important step in the maturation of cryptocurrency-based investment products.

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