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SEC’s Expected ETF Approval Spurs Fee Competition Among Issuers

2024.01.09

 

Key Takeaways

  • The SEC is poised to approve U.S. spot bitcoin ETFs, with 13 potential issuers revealing diverse fee structures.
  • Bitwise offers the lowest fee at 0.24%, while Grayscale plans a higher fee of 1.5% for its ETF conversion.

Fee Strategies Among ETF Issuers

As the U.S. Securities and Exchanges Commission (SEC) prepares to potentially approve several spot bitcoin exchange-traded funds (ETFs), issuers are differentiating themselves with their fee structures. Bitwise stands out with the lowest fee of 0.24%, followed closely by Ark and 21Shares at 0.25%. BlackRock, the world’s largest asset manager, has also surprised the market with a competitive fee of 0.30%.

Varied Pricing Approaches

Other issuers such as Fidelity, Invesco, and Galaxy have set their fees higher, ranging from 0.39% to 0.59%. Valkyrie and Hashdex have opted for even higher fees at 0.80% and 0.90%, respectively. Most issuers plan to offer reduced fees for a limited time after their ETFs’ launch, aiming to attract initial investors.

Grayscale’s Unique Position

Grayscale, looking to convert its Grayscale Bitcoin Trust (GBTC) into an ETF, is proposing a fee of 1.5%. This fee, although lower than GBTC’s current management fee, is still higher compared to its competitors. However, Grayscale’s substantial asset base of over $27 billion provides it with a significant advantage in terms of size.

Market Reactions and Comparisons

The competitive fee setting among potential bitcoin ETF issuers has sparked discussions among market analysts. Bloomberg Intelligence’s Eric Balchunas and other ETF experts have weighed in on the implications of these diverse fee structures. The average fee for ETFs in 2022 was 0.37%, as per Morningstar research, highlighting the competitive nature of the proposed bitcoin ETF fees.

 


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