TLDR
- Grayscale files to launch spot AAVE ETF on NYSE Arca
- AAVE Trust restructuring targets regulated ETF access
- Coinbase named custodian for proposed AAVE ETF
- AAVE jumps 9% as ETF filing boosts momentum
- Spot AAVE ETF adds to growing crypto ETF race
Grayscale has filed an S-1 registration statement with the U.S. Securities and Exchange Commission to convert its AAVE trust into a spot exchange-traded fund. The proposed product would track the market price of AAVE and list on NYSE Arca. The filing places Grayscale among asset managers seeking regulated exposure to decentralized finance tokens.
Grayscale Moves to Convert AAVE Trust Into Spot ETF
Grayscale submitted the S-1 form as part of its plan to restructure its existing AAVE trust. The company aims to transition the vehicle into a spot ETF structure. The proposed fund would hold AAVE directly as its underlying asset.
The filing outlines a sponsor fee of 2.5% of net asset value. The fund would pay that fee in AAVE rather than cash. Grayscale also named Coinbase as custodian and prime broker for the product.
The ETF intends to list shares on NYSE Arca upon approval. Grayscale continues its strategy of converting closed-end trusts into exchange-traded funds. The company previously converted its Bitcoin trust after securing regulatory clearance.
AAVE Governance Vote and Market Position
AAVE operates as the native token of the Aave decentralized lending protocol. The protocol allows users to lend and borrow crypto assets without intermediaries. The token also functions as a governance mechanism for its decentralized autonomous organization.
Recent attention followed a governance vote aimed at decentralizing Aave’s operational structure. The community supported the proposal, according to reports. That development added momentum to discussions around institutional access to AAVE.
AAVE holds a market capitalization of about $1.8 billion. The token recently traded near $119, reflecting a daily gain of about 9%. It previously reached an all-time high of $661.69 in April 2021.
Competitive ETF Landscape and Broader Context
Grayscale manages billions of dollars in digital asset products. The firm has filed multiple applications for spot cryptocurrency ETFs in recent years. Several of those products, including Bitcoin and Ethereum funds, received regulatory approval.
The company’s legal victory over the Securities and Exchange Commission marked a turning point for spot Bitcoin ETFs. That ruling enabled Grayscale to convert its Bitcoin Trust into an ETF. Other issuers then secured approval for competing spot Bitcoin products.
Bitwise filed paperwork in December for multiple crypto-related funds, including an AAVE-focused product. Grayscale now advances its own proposal within that competitive landscape. If approved, the Grayscale AAVE ETF would expand regulated access to decentralized finance tokens in U.S. markets.
