The race to lower fees for spot Ethereum exchange-traded funds (ETFs) has begun as applicants aggressively reduce costs to attract investors.
Experts note that fee wars are common in the ETF industry, as issuers tend to reduce their expense ratios to attract inflows. The crypto industry experienced this firsthand during the January approval process for spot Bitcoin ETFs by the SEC.
ETH ETF Fee Wars on The Horizon
Bloomberg’s ETF analyst Eric Balchunas noted that the industry has seen its “opening shot in the ETH ETF fee war.” This happened after Franklin Templeton submitted its revised application to the SEC on May 31, introducing a 0.19% fee for its proposed spot Ethereum ETF . Additionally, the company said it would waive fees on the first $10 billion in assets for the first six months.
“The Sponsor’s Fee is accrued daily at an annualized rate equal to 0.19% of the net asset value of the Fund and is payable at least quarterly in arrears in US dollars or in-kind or any combination thereof. The Sponsor may, at its sole discretion and from time to time, waive all or a portion of the Sponsor’s Fee for stated periods of time,” the filing stated.
Read more: Ethereum ETF Explained: What It Is and How It Works
Consequently, this action has prompted speculations that the Ethereum ETF market will experience its own “fee wars” among applicants. Nate Geraci, President of the ETF Store, said Grayscale’s ETH mini-trust fee would be the “most interesting fee to watch.” Geraci’s view is unsurprising, considering the investment firm’s Bitcoin fund experienced significant outflows due to its high fees compared to competitors.
“Are they going for jugular or no? Either way, it’s clear spot ETH ETFs will price in same neighborhood as spot BTC ETFs,” Geraci added .
While community attention appears fixated on the impending fee wars, other ETH ETF applicants have updated their filings with the SEC. The most notable change occurred with the 21Shares application, which removed all mention of Ark Invest. The ETF has been renamed from the “ Ark 21Shares Ethereum ETF ” to the “21Shares Core Ethereum ETF.”
In response to this change, Ark Invest reportedly stated that it believes in Ethereum’s potential and is seeking efficient ways to provide its investors with access to the asset.
“ARK believes in its transformative potential and the long-term value of the Ethereum blockchain but, at this time, ARK will not be moving forward with an Ethereum ETF. We will continue evaluating efficient ways to provide our investors with exposure to this innovative technology in a way that unlocks its full benefits,” ARK declared .
