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- Grayscale would have a difficult decision to make on fees metrics, if a spot BTC ETF approval came today.
- Its GBTC product currently bears 2% fee, relative to the average 0.54% across US-listed ETFs, and 1.48% for global crypto ETPs.
- This means the Bitcoin Trust would be at a disadvantage compared to the more affordable alternatives offered by rival issuers.
Grayscale asset management firm recently won in its months-long case against the US Securities and Exchange Commission (SEC). The judge determined that the regulator reviews its previous rejection of Grayscale’s application to have its Bitcoin Trust (GBTC), which is worth $17 billion, converted to a physically backed Exchange-Traded Fund (ETF). The decision could lead to the approval of the first spot Bitcoin ETF in the United States.
Also Read: Breaking: Grayscale wins lawsuit against US SEC, Bitcoin price nears $28,000
Grayscale deliberates fees ahead of spot BTC ETF approval
The resounding victory could have set the stage for another challenge in Grayscale’s mission to offer Bitcoin ETFs. According to a Bloomberg report, fees may present as the next obstacle, putting the asset manager at a disadvantage compared to other issuers in the race.
Specifically, if the SEC gives agrees to convert the GBTC to an ETF, Grayscale may have to revise its fees. This is because its peers in the spot BTC ETF race, comprising BlackRock, Invesco, and Fidelity, among others, over more affordable fees, averaging at around 0.54% across US-listed ETFs, and 1.48% for global crypto ETPs. These low-cost fees are among the many reasons giving BlackRock the hope for speedy approval.
Considering the EF filings between the peers are just about similar, some issuers will leverage their fees for competitive advantage and as a distinguishing fact. Citing ETF Store president Nate Geraci:
Grayscale is up against issuers such as BlackRock and Invesco who are highly accustomed to bludgeoning each other on fees…sot-Bitcoin ETFs will all generally look the same – they simply hold Bitcoin — which makes fees a key differentiator.
Already, Grayscale has already started contemplating a slash of the fees, with CEO Michael Sonnenshein expressing the company’s commitment to reduce fees once GBTC converts to an ETF.
Fees as a concern in the ETF space
The place of fees in the ETF space is pronounced, especially where the number of potential issuers is many. BlackRock enjoys a competitive advantage for more reasons other than its expansive assets under management (AUM). This includes low fees.
Another issuer that is leveraging low-cost fees for competitive advantage is Roundhill, looking to introduce a product with a fee of 0.19%.
Meanwhile, the market continues to wait for the SEC to give approvals with several deadlines due this week.
Crypto ETF FAQs
An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.
Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.
Source: FX STREET