Major Bitcoin BTC/USD ETF applicants made last-minute changes to their fee structures this week in anticipation of a final decision from the SEC.
What Happened: BlackRock Inc BLK kicked off the developments with an S-1 showing a 0.30% fee, but noted it will be 0.20% for the first year or $5 billion in assets. Within 20 minutes, ARK21 dropped its fee from 0.80% to 0.25%. Bloomberg's Senior ETF Analyst Eric Balchunas tweeted: “Told y’all the fee war would break out bf they even launched. And this is w out Vanguard on the mix. Damn.”
In a flurry of early morning updates, several applicants rushed to undercut each other on the fees for the anticipated ETF launches. Here are all spot Bitcoin BTC/USD ETF fee proposals of ETF applicants at the time of writing:
- BlackRock: 0.20% for 1st year or the first $5 billion, then 0.30%.
- ARK21: 0.25% (from 0.80%), waived for 6 months or the first $1 billion.
- Bitwise: 0.24%, waived for 6 months or the first $1 billion.
- Invesco Galaxy: 0.59%, waived for 6 months or the first $5 billion.
- VanEck: 0.25%
- Franklin: 0.29%
- Fidelity: 0.39%
- Wisdom Tree: 0.50%
- Valkyrie: 0.80%
- Hashdex: 0.90%
- Grayscale: 1.5%
Read More: Will Spot Bitcoin ETF Approval Be A Boon Or Bane? Here's What Industry Experts Say
Why Does It Matter: Sponsor fees cover the expenses of running a fund and account for the partial expense ratio. It is one of the hurdles ETF applicants need to clear to get approved. The whirlwind of developments prompted talk of a "fee war" among analysts and observers.
Entrepreneur and Bitcoin investor, Lark Davis took to his X platform to highlight, “All of these fees are much lower than expected. Why? Because all of these applicants are fighting to get the first customers. They're likely expecting a big demand right away and they want to make their product as appealing as possible. A wave of capital will flow into Bitcoin. Most likely starting this week.”
Gabor Gurbacs, director of Digital Asset Strategy at VanEck, mused how ETFs may eat into the business of cryptocurrency exchanges: “It costs less to hold a Bitcoin ETF for a year than a single trade on Coinbase. (~40-60bps vs ~25bps for a retail size trade).”
Balchunas added, "Will be interesting to see if crypto exchanges respond with their own fee cuts (bf it’s too late)."
Nate Geraci, president of investment advisor firm ETFstore, had anticipated the importance of fee disclosures in his tweet "5 things I’m watching this week re: spot bitcoin ETFs."
He also quoted the size of first-day inflows as a major point to watch this week. VanEck's Matthew Sigel reported in a Twitter space that, according to his "well-placed source," BlackRock may have "more than $2 billion lined up in week one in new incremental flows from existing Bitcoin holders who are adding to positions."
If this scenario unfolds, the spot Bitcoin ETF could become one of the most successful ETF launches in history.
Read Next: Spot Bitcoin ETF Issuers Given Clearance To Submit Final Documents
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
