Crypto asset management company Grayscale has filed for regulatory approval to convert its token-tracking trust of decentralized lending protocol Aave into an exchange-traded fund.
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 change its name to the Grayscale Arb Trust ETF.
Grayscale added that it plans to list the fund on NYSE Arca, one of the most popular exchanges for ETF trading, under the ticker “GAVE.” There is a 2.5% fee and Coinbase acts as both custodian and prime broker.
Grayscale’s filing is one of several ETFs aiming to track altcoins, suggesting Wall Street still has appetite for crypto exposure even amid the market downturn.
According to DefiLlama, Aave is the largest decentralized finance protocol with over $27 billion locked in total. The platform allows users to lend and borrow cryptocurrencies across multiple blockchains and earn yield by staking AAVE tokens.
Grayscale joins Bitwise in the Aave ETF race
With this filing, Grayscale becomes the second company to seek U.S. regulatory approval for an Aave-related ETF (AAVE), with Bitwise the only one currently considering launching a similar fund.
In December, Bitwise filed with the SEC to launch the Bitwise AAVE Strategy ETF, among a number of applications seeking to create ETFs related to popular altcoins such as 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 such as other ETFs that are exposed to AAVE, while Grayscale’s ETF will hold AAVE tokens directly.
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The two ETFs will be the first in the US to offer direct exposure to Aave, joining a short list of overseas products launched to track the token.
In Europe, 21Shares launched its Aave-listed product on Nasdaq Stockholm in November, several years after Global X launched a similar Aave product in Germany in early 2023.
According to CoinGecko, the AAVE token has fallen 1.6% over the past day to $126, leaving it more than 80% off its all-time high of nearly $662, set in May 2021 during the altcoin bull market.
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