Crypto asset manager Grayscale filed for regulatory approval to convert its trust tracking the token of the decentralized lending protocol Aave into an exchange-traded fund (ETF).
The company filed a Form S-1 registration statement with the Securities and Exchange Commission on Friday, saying it intends to convert the trust and rename it the Grayscale Aave Trust ETF.
Grayscale added that it is looking to launch the fund on NYSE Arca, one of the most popular exchanges for trading ETFs, under the ticker “GAVE.” It will have a fee of 2.5%, and Coinbase will serve as both its custodian and prime broker.
Grayscale’s filing is one of multiple ETFs that seek to be tied to altcoins, suggesting that Wall Street still has an appetite for crypto exposure even amid a market downturn.
Aave is the largest decentralized finance protocol, with over $27 billion in total value locked, according to DefiLlama. The platform allows users to lend and borrow crypto across multiple blockchains, and the AAVE token can be staked to earn yield.
Grayscale joins Bitwise in Aave ETF race
With its filing, Grayscale is the second to seek US regulatory approval for an ETF tied to Aave (AAVE), currently joining only Bitwise in looking to launch a similar fund.
Bitwise filed with the SEC in December to launch the Bitwise AAVE Strategy ETF, among a slew of filings that sought to create ETFs tied to popular altcoins, including Uniswap (UNI) and Zcash (ZEC).
Bitwise’s ETF plans to hold up to 60% of its assets directly in AAVE tokens and at least 40% in securities, like other ETFs, that are exposed to AAVE, while Grayscale’s would directly hold AAVE tokens.
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The two ETFs are set to be the first in the US to offer exposure to Aave on its own, joining a short list of overseas products that have launched to track the token.
In Europe, 21Shares launched an Aave exchange-traded product on the Nasdaq Stockholm in November, coming years after Global X launched a similar Aave product in early 2023 in Germany.
The AAVE token has traded down 1.6% over the past day to $126 and is more than 80% down from its all-time high of nearly $662, which it reached in May 2021 amid a bull market for altcoins at the time, according to CoinGecko.
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