On Monday morning, no less than 10 firms made updated filings for spot bitcoin ETFs and each included expense ratios, sparking excitement in the industry. With approval of a spot bitcoin ETF considered imminent by many, the field for the first such product to launch is wide open. And from what we’ve seen previously, that first-mover advantage is critical.
For example, the ProShares Bitcoin Strategy ETF (BITO) was the first bitcoin futures ETF to launch — in October 2021 — and it now has $1.7 billion. The next largest long bitcoin futures fund is the VanEck Bitcoin Strategy ETF (XBTF), with just $55 million, despite having essentially the same strategy but being nearly 20 basis points cheaper than BITO.
The stated expense ratios for the funds in Monday’s filings cover quite the range.
“The high competition for advisor attention has encouraged asset managers to price these products aggressively. While costs will matter to many, we believe asset manager brand/expertise and product liquidity will also be important,” said VettaFi’s Head of Research Todd Rosenbluth.
A Spot Bitcoin ETF Fee War Breaks Out
Notably, the most recent filing for the ARK 21Shares Bitcoin ETF (ARKB) includes a waiver that reduces the fund’s expense ratio from 0.25% to zero for its first six months of trading or until it reaches $1 billion in assets under management, whichever happens first, according to its prospectus.
Similarly, Bitwise plans to waive its entire 0.24% fee for the first six months of trading, with the waiver removed should the fund hit $1 billion in assets during that six-month period. And iShares is looking to charge 0.30% for its product, but waive 10 basis points of that cost for the first year, with the waiver removed should the fund hit $5 billion in assets during the 12-month period, the prospectus said. Meanwhile, Invesco will charge 0.59%, but waive the entire fee for the first six months, with the waiver only removed during that time if the fund hits $5 billion in assets.
Several other firms — including VanEck, WisdomTree, Fidelity, Valkyrie, and Franklin Templeton — updated their physical bitcoin ETF filings Monday morning, with expense ratios ranging from 0.25% (VanEck) to 0.80% (Valkyrie).
Grayscale’s Conversion Quest
However, the highest expense ratio comes from the GrayScale Bitcoin Trust (GBTC), which in its Monday morning filing indicated its fund would come with a 1.5% expense ratio. GrayScale is in the process of converting its $27 billion bitcoin trust into an ETF, and even successfully sued the SEC over a prior rejection of its application to do so. Although it’s the most expensive of the proposed ETFs, the trust’s current expense ratio stands at 2.00%, and the issuer will give up 50 basis points in expense ratio once the trust becomes and ETF.
Grayscale’s Global Head of ETFs David LaValle told CoinDesk in an interview that GBTC’s size and liquidity were a “massive differentiator.”
But not every firm looking to launch a spot bitcoin ETF updated its filing Monday morning. The Hashdex Bitcoin ETF has been in registration with an expense ratio of 0.90%, while the most recent filing for the Pando Asset Spot Bitcoin Trust (PBTC) , as of December 22, 2023, does not currently have an expense ratio listed.
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