Spot Ethereum ETF issues start a fee-free frenzy – Who will win?
The Ethereum ETF market is about to get wild. Next week, several Ethereum ETFs are set to list, and the competition is already fierce. To stand out, many issuers are slashing fees, even waiving them entirely, to attract investors.
According to information we got from Bloomberg ETF analyst James Seyffart, these promotional discounts range from full waivers to around 50% fee reductions. The offers vary in duration, from six months to a year, or until the funds hit certain asset levels.
Seven out of the ten proposed spot Ethereum ETFs are cutting fees. Grayscale Ethereum Trust (ETHE) and Invesco Galaxy Ethereum ETF aren’t joining the fee war.
ProShares Ethereum ETF is also out of the race for now, lagging behind in the registration process and not even expected to list next week.
Among the fee cutters, Franklin Templeton’s Franklin Ethereum ETF (EZET) is leading the charge. They are waiving management fees for a full year or until the fund reaches $10 billion in assets under management (AUM).
Even after this period, their baseline fee is only 0.19%, the lowest among them all. The fees for other spot Ether ETFs range between 0.20% and 0.25%. However, Grayscale Ethereum Trust (ETHE) is an exception.
Trading since 2017, Grayscale is sticking to its 2.5% fee. As Cryptopolitan reported earlier, they’re also launching a new product, Grayscale Ethereum Mini Trust, with a more competitive fee. For the first year or until AUM hits $2 billion, the Mini Trust will charge just 0.12%.
Nine asset managers are in the fray. We got BlackRock, Ark Invest/21Shares, VanEck, Grayscale, Fidelity, Bitwise, Proshares, Franklin Templeton, and then Invesco/Galaxy Digital.
Each fund is almost identical, making fees a battleground. VanEck comes second after Franklin Templeton at 0.20%, and Invesco/Galaxy Digital at 0.25%.
The final list of fees will be revealed when the registration statements, or S-1s, are submitted to the SEC. This is expected on Tuesday, right before trading begins.
The ETFs will be listed on the Nasdaq, Chicago Board Options Exchange (CBOE), and New York Stock Exchange. James predicts that demand for the ETFs will be about 20% of the spot Bitcoin ETFs.
This is due to Ether’s market capitalization being roughly one-third of Bitcoin’s. He also points out a drawback. Investors won’t be able to stake their Ether, missing out on yield generation.
Despite this, James believes the ETFs will be “extremely successful” by any standard. K33 Research also has bullish predictions.
They estimate that in the first six months of trading, inflows will hit $4 billion, about a quarter of the spot Bitcoin ETFs. If K33’s forecast is correct, 1% of all ETH in circulation could be absorbed by these ETFs by the end of the year.
