Spot Bitcoin ETF applicants have set low fees to attract fund advisors with experts highlighting that custodians will be forced to lower fees to remain competitive in the near future.
The race to attract institutional clients to invest in spot Bitcoin Exchange-Traded Funds (ETFs) has trickled down to the specific sponsor fees. With investors having a wide variety of fund managers to choose from, the back-end detailing of the spot ETF will determine the winner. In addition, advisors to most investors in the United States will be evaluating the spot Bitcoin ETF liquidity to determine the best-fit fund manager. As a result, the dozen spot Bitcoin ETF applicants have been working with traditional financial institutions to ensure ample liquidity access.
Spot Bitcoin ETF Fee Wars
With the decision for the spot Bitcoin ETF applications expected later today, all the involved fund managers – led by Grayscale Investments, Ark Invest, and BlackRock Inc (NYSE: BLK) – have already filed their detailed sponsor fees. According to re-filings with the United States Securities and Exchange Commission (SEC), the Bitwise Bitcoin ETP Trust (NYSE: BITB) has the lowest fee of 0.20 percent and a waiver of 6 months or until the fund hits $1 billion.
The Ark 21Shares Bitcoin ETF (CBOE: ARKB) has the second lowest sponsor fee of 0.25 percent and a six-month waiver until the fund hits $1 billion. Blackrock’s iShares Bitcoin Trust (NASDAQ: IBT) has set its sponsor fee between 0.20 percent and 0.30 percent with a 12-month waiver or until the fund hits $5 billion. The VanEck Bitcoin Trust (CBOE: HODL) has set its sponsor fee at 0.25 percent without any waiver detailing.
Updated Fee war for the #Bitcoin ETF Race. Was missing Wisdomtree's waiver that was added this morning! Looking for potential approvals tomorrow and potential listings on Thursday pic.twitter.com/7WCTUO95nf
— James Seyffart (@JSeyff) January 9, 2024
Notably, the spot Bitcoin ETF fees are expected to remain unchanged as it would tarnish the reputation of the respective fund managers in case of future alterations. As a result, experts argue that Bitcoin custodians – led by Gemini Custody, BitGo, and Coinbase Global Inc (NASDAQ: COIN) – will be compelled to lower their fees in a bid to remain competitive in an open market. Moreover, every fund manager could develop its infrastructure to facilitate secure Bitcoin custody and further cut fees.
Today’s anticipated approval of spot Bitcoin ETFs in the United States has increased the crypto volatility significantly in the recent past. In the past 24 hours, more than $216 million was liquidated from the crypto market following a false alarm that the US SEC had approved the spot Bitcoin ETFs. Notably, the US SEC Chair Gary Gensler clarified that the agency’s X account was hacked, thus resulting in the false alarm. Meanwhile, Bitcoin price reached a new multi-month high of around $47.9k but has since retracted to trade at about $46k during the early Asian session on Wednesday.