Spot Bitcoin ETF Fees: Bitwise goes low, Grayscale goes high

• Multiple Bitcoin ETF issuers have lowered their fees, with Bitwise offering 0.24%, creating fierce competition in the market.
• Grayscale’s planned fee for its Bitcoin ETF at 1.5% is significantly higher than rivals, potentially impacting its competitiveness.
• SEC commissioners are set to vote on Bitcoin ETF applications soon, with market expectations for a potential launch around January 11th.

Applicants awaiting approval for spot Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC) have filed final S-1 form amendments, introducing competitive fee rates as low as 0.24%.

Spot Bitcoin ETF Competitive Fee Rates

• Bitwise offers the lowest sponsor fee, with no fee for the first six months and the first $1 billion in assets, followed by a 0.24% fee.
• ARK Invest and 21Shares have a similar fee structure, featuring no fee for the initial six months or until assets reach $1 billion, followed by a 0.25% fee.
• VanEck lists a 0.25% fee.
• Franklin charges a 0.29% fee.
• Fidelity imposes a 0.39% fee.
• BlackRock sets its fee for the iShare ETF at 0.20% for the first 12 months or until the first $5 billion, then increases it to 0.30% as the ongoing fee.
• Wisdomtree comes in at 0.5%.
• Galaxy Invesco offers the first six months with no fee, followed by a 0.59% fee.
• Valkyrie has a 0.80% fee.
• Hashdex has a sponsor fee of 0.90%.
• Grayscale dropped its fee from 2% to its newly listed fee of 1.5%.

Analysts speculate that fee reductions among ETFs may influence cryptocurrency exchanges to respond with their own fee cuts to remain competitive.

Read: Spot Bitcoin ETF Issuers File Amended Applications and Now The Waiting

Grayscale’s Approach

One standout in the fee arena is Grayscale, which aims to transform its Grayscale Bitcoin Trust (GBTC) into an ETF. Grayscale has chosen a relatively high fee of 1.5%, albeit lower than the trust’s current 2% management fee, and there is a possibility to waive the fee.

However, GBTC investors have limited exit options, as redemptions have been disallowed for the trust, forcing them to sell shares on the secondary market at a discount to their net asset value.

Some industry experts have expressed doubts about its competitiveness.

Eric Balchunas suggested that it’s “hard to imagine advisors picking a 1.5% ETF,” while ETF expert Nate Geraci noted that Grayscale’s fee “simply isn’t going to cut it.” To provide context, the average fee for ETFs in 2022 stood at 0.37%, as per Morningstar’s research.

However, Grayscale possesses a crucial advantage that could play a pivotal role in the ETF landscape: size. With more than $27 billion in assets under management, Grayscale holds a substantial edge over its competitors, many of whom are starting from scratch.

With final amendments submitted, the SEC commissioners are expected to vote on the ETFs’ approval, with the market anticipating their debut around January 11.