Board Thread:Speculation House/@comment-3257939-20130927024601/@comment-18396318-20130927034804

Sure, there's a need to hide that she's a faunus. Velvet's clearly having a hard time because of it, and Yang seems to think it's tough. There's the civil rights issues, too.

As for it possibly being her ears, just look at her official artwork. Top right on this wiki, actually. It's definitely a bow. Also, someone would definitely notice her ears if she just had them uncovered, and nobody has. Yang even called it a bow.