As spot Bitcoin ETF hopefuls rush to file their final documents with US regulators, a key difference is emerging among the applicants in their proposed fee structures.
At the top end: The Grayscale Bitcoin Trust, which would carry a 1.5% fee if the US Securities and Exchange Commission approves its conversion into an exchange-traded fund. While that would be lower than GBTC’s current 2% fee, it comes well above its competitors.
The race-to-the-bottom on fees is a feature of the highly competitive $8 trillion US ETF industry, where even a couple of basis points of difference can translate into millions of dollars worth of inflows.
While GBTC has an enormous advantage in existing assets — it boasts $27 billion in assets as a trust since its 2013 inception — its competitors will charge a fraction of its proposed expense ratio.
Bitwise and Ark / 21Shares are offering an initial sweetener of zero fees for the first six months or the first $1 billion in assets, whichever comes first. After that, their fees rise to 0.24% and 0.25% respectively.
VanEck’s HODL product would charge 25 basis points. BlackRock intends to charge 0.2% for the first year or until it reaches $5 billion in assets, with 0.3% as its eventual fee.
“This fee war is best possible situation for end investors,” said Bloomberg Intelligence ETF analyst James Seyffart.
Grayscale said they expect that GBTC would “continue to be a best-in-class offering for investors”, and cited their “liquidity, tight spreads, high trading volumes, and a decade-long track record of operational success”.
Crypto insiders are counting down to Wednesday, when the SEC faces one of its key deadlines to take action on pending spot Bitcoin ETF applications.
This article was provided by Bloomberg News.