Grayscale Holds Firm with High-Priced Product Amid Bitcoin ETF Fee War

• Bitcoin ETF Issuers Announce Fees Amid Market Competition
• Changes in Fee Structure
• Current Bitcoin ETF Issuer Fees
• The Stand of Grayscale

Bitcoin ETF Issuers Announce Fees Amid Market Competition

In the wake of the announcements of proposed fees by Bitcoin$42,260 -0.64% ETF issuers, some have decided to reduce their planned charges. This change signals the tough competition anticipated among these assets, assuming they get approval within the week. Despite this trend, Grayscale, the provider of an existing bitcoin investment product, is adhering to its higher fee. The gap between Grayscale and its competitors increased following the recent fee cuts.

Changes in Fee Structure

Valkyrie has almost halved its fee from 0.8% down to 0.49%, additionally offering a three-month grace period where no fees will be charged. Despite this reduction, the crypto asset manager still falls on the higher end of the fee spectrum, similar to competitors such as Fidelity (0.39%) and Invesco, which also reduced its fee by 20 basis points to 0.39%. Bitwise, previously the cheapest option with a 0.24% fee, lowered its charge even more to 0.20%, hence expanding its lead over competitors 21Shares, Ark, and VanEck who have kept their initial fees at 0.25%. WisdomTree also slashed its fee by 20 basis points to 0.30%.

Current Bitcoin ETF Issuer Fees

Bitwise: 0.20% Ark/21Shares: 0.25% VanEck: 0.25% Franklin$0.0015 -3.24% Templeton: 0.29% BlackRock: 0.30% WisdomTree: 0.30% Fidelity: 0.39% Invesco/Galaxy: 0.39% Valkyrie: 0.49% Hashdex: 0.90% Grayscale: 1.50%

With these recent changes, nine out of the total applicants, constituting the vast majority, could potentially charge investors a fee of less than 0.5% of the net asset value of the fund. Grayscale, in contrast, has a significantly higher fee at 1.5%. Experts believe that the crypto asset manager may reduce its fee in the future.

The Stand of Grayscale

Scott Johnsson, a former attorney at Davis Polk and GP at Van Buren Capital, explains that lowering the fee after establishing it is an easier task, as compared to increasing it after a conversion. He suggests that it would not be unreasonable for an asset manager to start with a higher fee and then adjust it accordingly.

The Grayscale Bitcoin Trust (GBTC), which the company intends to convert into an ETF, currently charges a 2% fee, meaning that a 1.5% fee would already be a reduction. Grayscale could also justify its high fee due to the significant competitive advantage it holds because of its large size. Boasting over $27 billion in assets under management (AUM), the asset manager is far ahead of its competitors, who are basically starting from scratch.

Edited by Jonathan Stoker