Several firms have recently reduced their proposed fees, as revealed in the latest versions of their S-1 forms submitted to the U.S. Securities and Exchange Commission.
This is in response to the ongoing industry competition, amplified by the anticipation surrounding the U.S. Securities and Exchange Commission’s (SEC) decision on spot Bitcoin ETFs.
Spot Bitcoin ETF Fee Wars Escalate
As the SEC deadline approaches, various applicants, including Valkyrie, WisdomTree, BlackRock, VanEck, Invesco, Galaxy, Grayscale, and ARK Invest, have revised their fees to gain a competitive edge.
On a more serious note… here’s all the firms doing the hard work behind the scenes. @Fidelity has lowered their fees all the way down to 25bps and is also offering a fee waiver to 0% through July 31, 2024 pic.twitter.com/Ao0WmICBFh
— James Seyffart (@JSeyff) January 9, 2024
Fidelity has lowered its fees from 0.39% to 0.25% bps and is offering a fee waiver of 0% through July 31, 2024. Bitwise is charging a fee of 0% for the first six months and the first $1 billion in assets, followed by a 0.20% fee.
ARK Invest and 21Shares have also slashed their fees from 0.25% to 0.21%. The company is upholding its zero fees policy for six months or until the total assets reach $1 billion.
BlackRock has adjusted its sponsor fee for its potential spot Bitcoin ETF to 0.25%, a reduction from the previous 0.3%. Additionally, the investment giant has lowered its temporary discount for the first $5 billion of assets in the initial 12 months from launch to 0.12%, down from 0.2%, as stated in the S-1 form filed today.
WisdomTree reduced its fee from 0.5% to 0.30%, with Galaxy Invesco lowering its fee from 0.59% to 0.39%.
Valkyrie introduced a three-month fee waiver, reducing its fee from 0.80% to 0.49%. Meanwhile, Hashdex maintained its sponsor fee at 0.90%, and Grayscale lowered its fee from 2% on January 8 to 1.5%, making it the pricier option among the group.
As the fee wars intensify, James Seyffart cautions that these fees still need to be finalized, leaving room for further adjustments.
Industry Sentiment
Amidst the ongoing adjustments, Bloomberg senior ETF analyst Eric Balchunas described the current situation as similar to compressing two years’ worth of fee wars into just a couple of days, emphasizing that while such battles can be challenging for issuers, they create a favorable environment for investors.
obvious point but ETF issuers lowering their fees to absolute bargain basement levels implies massive expectations on their part around AUM
the biggest financial instits in the world are telling u something … will u listen?
— nic 🌠 carter (@nic__carter) January 8, 2024
The fee wars have also sparked various theories about the motivations behind the fee cuts. Nic Carter sees the trend of bargain-basement fees as a sign of “massive expectations” from issuers regarding the volume of inflows they anticipate.
Peter Atwater offers a contrasting perspective. He suggests that issuers engaging in an aggressive fee war are conducting an extensive asset grab, even if it means sacrificing profitability.
Re Bitcoin ETFs: Typically, organizations wait to see how much they can sell before they slash prices.
— Peter Atwater (@Peter_Atwater) January 9, 2024
Atwater also posted on X that organizations typically wait to assess their sales potential before resorting to price slashes.
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