Grayscale Seeks SEC Approval to Convert Aave Trust into NYSE Arca ETF

Grayscale has formally asked U.S. regulators to approve a conversion of its Aave trust into an on‑exchange fund, seeking a NYSE Arca ticker and institutional custody while charging a notable management fee. The filing names the vehicle the Grayscale Aave Trust ETF, signals direct token holdings, and appoints Coinbase as both custodian and prime broker—moves that embed exchange infrastructure into an ETF wrapper.

• ETF Fee: 2.5% annual management fee
• Ticker: GAVE
• Planned listing venue: NYSE Arca
• Custodian / Prime broker: Coinbase
• Proposed holdings: Direct AAVE token exposure
• Competing filing (Bitwise): Up to 60% direct AAVE, at least 40% in securities

The filing contrasts with Bitwise’s proposed structure and follows European-listed AAVE products, indicating a push to provide U.S. investors with a regulated route to altcoin exposure. Grayscale’s direct‑hold approach simplifies index tracking but concentrates on custody and regulatory compliance, transferring wallet responsibilities to a regulated counterparty.

Approval would represent a material shift toward institutionalized access to DeFi tokens, but it is not assured given the SEC’s continuing scrutiny of crypto fund structures. The 2.5% fee sits well above many passive ETF benchmarks, which may narrow the target buyer base to investors seeking native AAVE exposure despite higher cost and counterparty concentration.

Competition between this filing and Bitwise’s product will likely determine market positioning, fee justification, and custody norms for future altcoin ETFs. Investors should therefore evaluate token custody risk, product fees, and allocation mechanics when comparing these vehicles.