BlackRock, Fidelity, and others outline fees for upcoming Ether ETFs, anticipating SEC approval next week
The competition for potential Ether ETF assets has begun even before the funds have launched, according to BNN Bloomberg.
BlackRock Inc., Fidelity Investments, Invesco Ltd., and Bitwise Asset Management Inc. have submitted their fee structures to the Securities and Exchange Commission. They outlined their plans for Ether ETFs, which will directly hold the second-largest cryptocurrency.
These filings anticipate the funds' launch as early as next week, pending final approval from the regulator.
BlackRock plans to charge 0.25 percent for its upcoming product, offering a reduced fee for the first 12 months or until they gather US$2.5bn in assets. Fidelity also intends to charge 0.25 percent, waiving the fee through the end of the year with no asset limit.
In contrast, 21Shares and Bitwise propose fees of 0.21 percent and 0.2 percent, respectively, with additional incentives.
The proposed fees range from 0.19 percent by Franklin Templeton to 2.5 percent by Grayscale Investments LLC. Grayscale aims to convert an existing fund into an Ether ETF and potentially launch another version with a lower expense ratio.
In the more than $9tn US market, the competition to offer the lowest-cost products has intensified. This rivalry was particularly fierce before the launch of spot-Bitcoin ETFs in January, with issuers like BlackRock and Invesco reducing their costs just before approval.
Ether increased by 1.5 percent to $3,467 as of 8:38 am in New York, marking a 50 percent gain this year, similar to Bitcoin's increase.
“It is odd that the market is not more excited — BTC has been slightly outperforming ETH over the past few days,” said Noelle Acheson, author of the Crypto Is Macro Now newsletter.
“This could signal low expectations of investor interest — after all, the ETFs won’t be distributing staking rewards, which essentially makes the opportunity cost of holding these products quite high.”
In May, the SEC approved a proposal by exchanges to list these products, marking another milestone for the crypto industry. A separate approval is required before their launch.
A recent Citigroup report predicts that these Ether funds, which directly hold the cryptocurrency, could see inflows between $4.7bn and $5.4bn in the first six months after their debut.
However, the actual flows might be lower as investors might have already entered the market through Bitcoin ETFs launched earlier this year.
Most asset managers in the Ether-funds race also launched spot-Bitcoin ETFs in January, which have garnered around $16.6bn in total net inflows.
To gain SEC approval, asset managers have made concessions, particularly regarding staking, the process of earning rewards for blockchain maintenance. Fidelity stated it would exclude staking from its ETF holdings, as staking raises questions about whether Ether should be classified as a security.
Stephane Ouellette, chief executive officer of FRNT Financial, commented, “We have seen this story play out in the Canadian ETF landscape, which launched spot crypto products on BTC and ETH in 2021. The BTC launches were very successful but ETH was far less so. In general, ETH participants engage in more involved on-chain activities, so getting exposure to a trust or fund product is less appealing.”
