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Counting your chickens before they've hatched has long been frowned upon in folklore. Nonetheless, this hasn't stopped Bitcoin ETF applicants from discounting their fees to undercut competition, on the assumption that approval will be granted.
Bloomberg predicts a 90% chance of approval by 10 January, which is tomorrow at the time of writing.
Submitting amendments to their Bitcoin ETF registrations to the SEC, applicants disclosed their proposed fee structures.
Blockhead
Bitwise Bitcoin ETF, ARK 21Shares Bitcoin ETF and Invesco Galaxy ETF are launching with a lowballing fee of just 0%.
BlackRock, the OG Bitcoin ETF applicant, proposed a fee of just 0.20% on the first $5 billion and 0.30% thereafter for its iShares Bitcoin Trust.
here's a table of the proposed spot Bitcoin ETF fees
— Katie Greifeld (@kgreifeld) January 8, 2024
excluding waivers --
low: Bitwise @ 0.24%
high: Grayscale @ 1.50%https://t.co/T5dNccZ3oJ via @crypto w/ @emilyjnicolle pic.twitter.com/yJ30yXmKRI
WisdomTree is placing a 0.5% fee on its trust whilst VanEck will impose a 0.25%. VanEck has also pledged 5% of its profits from the Bitcoin ETF to core developers at Brink.
An initial $10,000 donation to Brink was also made by VanEck to support its work.
"Your tireless dedication to decentralization and innovation is the cornerstone of the Bitcoin ecosystem, and we're here to support it—more details to come," said VanEck.
We’re not Bitcoin tourists at VanEck. We’re in it for the long haul. That’s why we made an initial $10k donation and signed a pledge to donate 5% of our Bitcoin ETF profits (if approved) to support Bitcoin Core devs @bitcoinbrink for at least 10 years. Your tireless dedication to…
— VanEck (@vaneck_us) January 5, 2024
Issuers charge these fees for services including buying and storing assets. Investors incur the fee which is deducted from the fund's assets, ultimately impacting their final returns.
Custodia Bank CEO Caitlin Long warns that issuers charging lower fees to manage a fund could be hiding other risks. Securities lending is a common practice in no-fee funds, which poses additional risk for investors.
🚨🚨🚨WHEN FEES ARE LOWER THAN COSTS, please please please ask yourself how the asset manager is making money managing the fund. With no-fee funds, the answer is usually securities lending—a practice that can pose A LOT of hidden risk to investors. What‘s really going on here?🤔 https://t.co/F04OV2z6wC
— Caitlin Long 🔑⚡️🟠 (@CaitlinLong_) January 8, 2024
Low fees might attract traders and thus boost liquidity but issuers could discuss reduced fees with custodians, which could impact entities such as Coinbase, which is tasked with holding Bitcoin as collateral for ETF shares.
Anndy Lian
