May 26, 2024
Bitcoin ETF Fee Wars
Bitcoin News

Bitcoin ETF Decision Nears as Companies Slash Fees

The United States Securities and Exchange Commission (SEC) is still waiting to announce its decision on the spot Bitcoin exchange-traded fund (ETF), and multiple applicants submitted their final S-1 form amendments on Jan. 8. Valkyrie led the filings for the final S-1 amendment, with subsequent submissions from WisdomTree, BlackRock, VanEck, Invesco, Galaxy, Grayscale, ARK Invest, and 21Shares.

Several of the applicants, among their amendments, have cut down on fees, heightening the competitive landscape among the various ETF offerings.

Bitwise presently holds the lowest sponsor fee for the filed ETFs, commencing with no fee for the initial six months and the first $1 billion in assets, followed by a 0.24% fee. ARK Invest and 21Shares also joined with no fees for the first six months or until $1 billion in assets, transitioning to a 0.25% fee afterward. Analyst Eric Balchunas of Bloomberg hailed ARK and 21Share’s reduction from 0.80% to 0.25% as “breathtaking,” emphasizing the fierce competition in fee reductions. VanEck listed a 0.25% fee, Franklin at 0.29%, and Fidelity at 0.39%.

BlackRock, the global asset manager, outlined its iShare ETF fee at 0.20% for the initial 12 months or until the first $5 billion, later increasing it to an ongoing fee of 0.30%. On the higher spectrum, Wisdomtree set its fee at 0.5%, while Galaxy Invesco offered the first six months without a fee, followed by a 0.59% fee. Valkyrie proposed an 0.80% fee, and Hashdex’s sponsor fee stands at 0.90%.

Grayscale reduced its fee from 2% to a newly listed fee of 1.5%, presently ranking as the most expensive among the listed ETFs. James Seyffart, a research and market analyst, highlighted on X (previously Twitter) that these figures aren’t final, anticipating possible further reductions in fees. Balchunas added that this could prompt cryptocurrency exchanges to respond with their fee cuts “before it’s too late.”

Balchunas pointed out that temporary fee waivers historically haven’t had a significant impact and that long-term investors tend to focus on regular fees. However, in this case, where the ETFs perform similar functions, he acknowledged the potential importance of these fee reductions. With the final amendments in place, the next stage expected is a vote by SEC commissioners. Market forecasts have been indicating the ETF’s potential debut on or around Jan. 11.

Image by freepik

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