Grayscale Aave ETF Filing: Will the SEC Approve GAVE on NYSE Arca?

Grayscale Aave ETF Filing: Is Wall Street Ready for Spot AAVE Fund?

In another new step that may transform the decentralized finance (DeFi) investment in the United States, Grayscale Investments has submitted an S-1 registration statement to the U.S. Securities and Exchange Commission to transform its current Aave Trust into a spot exchange-traded fund (ETF).

With approval, the product will become the Grayscale Aave ETF and trade on NYSE Arca under the ticker GAVE- a milestone in the direction of regulated exposure to DeFi tokens in US markets.

What Does Grayscale’s S-1 Filing Mean for Investors?

The proposed ETF would directly own AAVE tokens, providing spot exposure rather than futures- or derivative-based strategies. According to the filing:

• Ticker: GAVE

• Exchange: NYSE Arca

• Expense Ratio: 2.5%

• Custodian & Prime Broker: Coinbase.

The conversion would change Grayscale's privately held trust mechanism into a publicly traded ETF, enhancing liquidity, transparency, and accessibility for both institutional and retail investors.

This organization reflects the overall approach of the firm to transform crypto trusts into ETFs in the context of regulatory changes in the US crypto market.

Source: Official X

Why Is Grayscale Entering the Aave ETF Race Now?

Grayscale is not alone. In December 2025, asset manager Bitwise Asset Management submitted its own fund related to Aave, the Bitwise AAVE Strategy ETFs. Nevertheless, the two strategies are different:

• The Grayscale ETF fund directly owns tokens.

• Strategy ETFs by Bitwise: Will invest up to 60% in tokens and at least 40% in other related securities, such as other AAVE-exposed funds.

• This increases the competition in what may be the first US-approved Aave-focused category.

• The race is an indication of increased institutional trust in altcoins outside of Bitcoin and Ethereum, despite wider crypto market volatility.

Are Big Investors Returning to DeFi?

Aave is the biggest decentralized lending protocol in crypto. DefiLlama shows that the protocol has more than 10 billion of total value locked (TVL), so it is a fundamental component of the DeFi ecosystem. The token enables users to:

• Participate in governance

• Stake tokens to earn yield

• Secure the protocol

• Borrowing and lending utilities.

Nevertheless, with its good fundamentals, this token is currently trading at approximately $126.

Source: CoinMarketCap

The approval has the potential to open up institutional inflows and provide a regulated exposure to DeFi without tokens having to be custodied.

How Does This Compare to Global Aave Investment Products?

• Though the US market is yet to approve in isolation, Europe has already done so.

• In November, 21Shares introduced an exchange-traded product on Nasdaq Stockholm.

• In early 2023, Global X launched a comparable product in Germany.

• Should it be approved, Grayscale would be the first to place the US and the European markets on the list of regulated AAVE exposure.

What Does This Signal About the SEC’s Crypto Stance?

It is filed as part of a surge of altcoin filings, such as funds based on tokens such as Uniswap and Zcash. Even though the SEC is yet to change its crypto policy to become more permissive, recent approvals in the wider crypto industry suggest a slow transition to structured crypto-asset products.

The action by Grayscale could challenge the regulator in terms of whether it is willing to approve ETFs not only on Bitcoin and Ethereum but also on DeFi-centric tokens.

Final Thoughts: Could GAVE Become the First in the US?

The news of Grayscale converting into the GAVE ETF is an indication that the long-term viability of DeFi is now being reconsidered. The firm is making itself the leader of the next generation of crypto financial products by providing institutional-grade custody with direct token exposure through Coinbase.

Bitwise is also on the list, so the next several months might be the deciding factor in the United States. With its acceptance, this may be a big step toward reconciling conventional finance with the decentralized lending markets.

Disclaimer: This is not financial advice. Please DYOR before investing. CoinGabbar is not responsible for any financial losses. Crypto assets are highly volatile, and you can lose your entire investment.