- Spot Bitcoin
ETF applicants are engaging in a race to lower fee schedules for their proposed funds in the first few months to gain market share if such a fund is approved.
- VanEck has set a fixed fee of 0.25%, matching the lowest fee after competitors’ temporary fees cease.
- Bloomberg reporter Katie Greifeld commented, “These are very, very low figures,” particularly referring to Ark/21Shares offering zero fees for a limited period.
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Firms applying for a spot Bitcoin ETF in the U.S. have revealed their fees in their latest updates: What fees will each firm offer?
Competition in Spot Bitcoin ETF Fees
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Spot Bitcoin ETF applicants are engaging in a race to lower fee schedules for their proposed funds in the first few months to gain market share if such a fund is approved. Many applicants like BlackRock, Fidelity, and VanEck filed amended S-1 forms today—some revealing their proposed fees for the first time. Others revised their fees in light of the competition.
Ark/21Shares offered zero fees for the first six months or until the fund reaches $1 billion. Afterward, the fee will be 0.25%, making it one of the lowest fees in the package. This is significantly lower than the initially proposed 0.8% fee.
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BlackRock is offering fees of 0.2% until the fund reaches $5 billion or for the first 12 months. Afterward, the fee will rise to 0.3%, nearly at the lowest level in terms of fees. Bloomberg ETF analyst Eric Balchunas said, “I told you fee wars would start before ETF launches. And it’s happening, even without Vanguard. Wow.”
VanEck has set a fixed fee of 0.25%, matching the lowest fee after competitors’ temporary fees cease. Following this, Fidelity is at 0.39, and Invesco/Galaxy is at 0.59. Invesco/Galaxy also offers zero fees per asset up to $5 billion or for the first six months. Bitwise set a fee of 0.24%. Fidelity’s ETF fee is 0.29.
Balchunas added, “A note on the temporary fee cuts we’re seeing with Bitcoin ETFs. Historically, this hasn’t made much of a difference (in the old days, an ETF gave you the right to invest until it reached a certain AUM level, but no one cared). Advisors, being long-term investors, generally focus on regular fees. But since all these ETFs are doing the same thing, maybe looking at other equal factors could be key, we’ll see.”
Other issuers are offering higher fees; Valkyrie is at 0.8, and Hashdex is at 0.9. Grayscale, attempting to convert its Bitcoin fund into an ETF, has reduced its fees from 2% to 1.5%. Some issuers have not yet filed amended S-1 forms, so changes may occur.
Why are fees so low?
Bloomberg reporter Katie Greifeld commented, “These are very, very low figures,” particularly referring to Ark/21Shares offering zero fees for a limited period. She evaluated this against the 0.4% fee demand of the largest physically backed commodity ETF, SPDR Gold Shares.
With these low fees, potential spot Bitcoin ETF issuers seem to be competing through their fee structures to gain market share in the first few months of a potential launch. Whoever wins the initial momentum may carry it forward—a belief also based on the idea of a tremendous potential market for such products.
For instance, VanEck expects its spot Bitcoin ETF to see $1 billion in inflows in the first few days and $2.4 billion within a quarter. Galaxy forecasts $14 billion in inflows in the first year. Looking further ahead, Bitwise expects the market size to be around $72 billion within five years.
With the latest documents filed and fees largely settled, it is now up to the SEC to decide whether to approve the 19b-4 forms and allow the S-1 forms to become effective. If both are approved, trading can begin the next day, initiating competition for market share.