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

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TLDR

  • Grayscale is requesting SEC authorization to transform its AAVE token trust into an ETF.
  • AAVE’s market capitalization is $1.8 billion, and its token trades at $119.
  • Grayscale targets a NYSE Arca listing and proposes a 2.5% sponsor fee based on net asset value.
  • Coinbase will serve as the custodian for Grayscale’s AAVE ETF.

Grayscale has officially filed a request with the Securities and Exchange Commission (SEC) to transform its closed-end AAVE trust into an exchange-traded fund (. The ETF would be listed on NYSE Arca. This action demonstrates Grayscale’s ongoing strategy to broaden its cryptocurrency investment offerings after successfully converting its Bitcoin Trust into a spot Bitcoin ETF.

The AAVE token, native to the Aave protocol, currently has a market capitalization of roughly $1.8 billion. At filing time, the token trades at approximately $119, marking a significant 9% daily gain, per The Block data. AAVE hit a record peak of $661.69 in April 2021, reflecting its historical trajectory in the crypto market.

Grayscale’s Push to Expand Its ETF Portfolio

Grayscale’s move to seek AAVE ETF conversion builds on its Bitcoin Trust success. The firm has already converted multiple closed-end funds into ETFs, notably its spot Bitcoin ETF. Its legal win with the SEC concerning the Bitcoin Trust created opportunities for other crypto offerings, such as spot Bitcoin ETFs, to potentially enter the U.S. market.

Grayscale is positioning itself to capture greater market interest in DeFi assets, and AAVE represents a strong opportunity. The token plays a major role in decentralized finance as the native asset of the Aave protocol. Aave has become a leading decentralized lending platform, driving increasing demand for associated financial products.

AAVE ETF Features and Structure

The proposed AAVE ETF would carry a 2.5% sponsor fee on its net asset value (NAV), payable in AAVE tokens. Using AAVE for fees aligns with the asset’s fundamental role in the DeFi ecosystem. Furthermore, Grayscale has chosen Coinbase to serve as both custodian and prime broker for the . Coinbase’s involvement guarantees secure token storage and management within the fund, meeting industry standards for digital asset custody.

This filing occurs as interest grows in crypto-focused ETFs, especially those targeting individual tokens like AAVE. Although other companies, including Bitwise, have filed for similar AAVE ETFs, Grayscale’s established reputation makes it a key player. Grayscale’s track record of converting existing trusts into ETFs could create a blueprint for other crypto assets if the SEC approves this AAVE ETF application.

The Competitive Landscape for AAVE ETF Listings

Though Grayscale’s application is significant, it competes with other asset managers pursuing comparable crypto ETF products. In December 2025, Bitwise filed applications for 11 distinct crypto-focused ETFs, one of which targets AAVE.

This competitive environment increases pressure on Grayscale to be among the first to launch an in the U.S. However, these filings’ outcomes remain unclear, as the SEC continues evaluating such products’ viability.

As cryptocurrency regulation continues developing, approving Grayscale’s AAVE ETF could mark a milestone in mainstream acceptance of DeFi investment vehicles. The approval process will probably entail rigorous review, particularly as regulators examine AAVE’s and other DeFi assets’ unique features relative to traditional financial instruments.

What’s Next for Grayscale and the AAVE Token?

Grayscale’s next steps depend on the SEC’s reaction to its filing. If greenlit, the AAVE ETF could offer a more conventional investment path for those seeking Aave protocol exposure without direct token ownership. The ETF’s potential success might open doors for broader DeFi asset adoption in mainstream finance, generating opportunities for investors and asset managers alike.

As the crypto sector expands, products like the may gain prevalence, bridging traditional finance and the emerging DeFi landscape. Full approval and eventual listing of the AAVE ETF would represent a significant milestone in the evolution of cryptocurrency investment products.