Despite this fee waiver, Global X’s Bitcoin and Ethereum ETPs remain relatively modest in size.
Global X, a US-based ETF provider, has announced a temporary elimination of fees for its two cryptocurrency exchange-traded products (ETPs) in Europe. This move aims to attract more European investors to the rapidly growing cryptocurrency market.
Owned by South Korea’s Mirae Asset, the $57 billion asset manager will not levy any fees for its Bitcoin and Ethereum ETPs until January 3, 2025. Following this period, a 0.29% fee will be applied. These ETPs, which debuted on stock exchanges in Frankfurt and Zurich in March 2022, initially carried a fee of 0.65%.
Competitive Fee Reductions Could Attract Customers
Global X’s decision comes in the wake of the launch of similar Bitcoin and Ethereum products on the London Stock Exchange (LSE). Earlier this year, the UK’s Financial Conduct Authority (FCA) allowed approved firms to offer crypto ETNs, although these products are restricted to professional traders.
This led to the launch of WisdomTree and 21Shares crypto ETPs into the LSE. Global X’s decision to waive crypto ETP fees is seen as a strategic move to gain a competitive edge in the European market. WidomTree currently charges the lowest fees of 0.35%, but with Global X’s complete slashing of fees, the competition among European ETP providers is heating up.
Rob Oliver, the head of Global X ETFs in Europe, noted that this fee waiver demonstrates the company’s dedication to the European market and its investors.
Despite this fee waiver, Global X’s Bitcoin and Ethereum ETPs remain relatively modest in size. As of late May, the Bitcoin fund manages about $4.3 million, while the Ethereum fund holds around $5.7 million.
Europe’s Struggling ETP Market
The European market has grappled with slow demand for ETPs. According to Morningstar data, Bitcoin ETPs have witnessed just over $500 million in outflows since January, while other ETPs have attracted net inflows of less than $50 million. In contrast, the US market is thriving, particularly with recent regulatory improvements.
Pierre Debru, WisdomTree’s head of quantitative research previously cited the fee discrepancy between European and US ETP issuers. This fee discrepancy has put European issuers at a disadvantage, affecting their ability to compete with their American counterparts. Despite the slow growth of Europe’s ETP market, queries regarding these products have increased among potential investors.
Fee reductions could serve as a catalyst for sparking investor adoption of crypto ETPs, especially considering the potential benefits these products offer as a hedge against inflation. Lowering fees would not only make crypto ETPs more attractive from a cost perspective but also increase their competitiveness relative to other investment options. The actual effects of Europe’s crypto ETPs fee reduction remain to be seen in the coming months.
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