A fierce competition over fees has erupted among issuers of spot Ethereum exchange-traded funds (ETFs) as they prepare for their anticipated debut next week. The majority of soon-to-be-listed Ether ETFs are offering temporary fee waivers or discounts, according to recent filings with U.S. regulators.
Franklin Templeton’s Franklin Ethereum ETF (EZET) has taken the lead in this fee race, offering a complete fee waiver for the first year or until the fund reaches $10 billion in assets under management (AUM). EZET also boasts the lowest baseline fee at 0.19%.
The promotional discounts across various ETFs range from complete waivers to approximately 50% reductions, with durations spanning from six months to a year. Some of these offers are set to expire once the ETFs accumulate a certain amount of AUM.
Out of the ten proposed spot Ether ETFs, seven are participating in this fee-cutting trend. Notable exceptions include Grayscale Ethereum Trust (ETHE) and Invesco Galaxy Ethereum ETF, which have opted out of the fee war. ProShares Ethereum ETF, lagging behind in the registration process, is not expected to list next week.
On July 17, issuers submitted the final round of amended S-1 registrations for nine proposed spot ETH ETFs, following reports that the U.S. Securities and Exchange Commission had indicated July 23 as the potential listing date for these publicly traded funds.
Most spot Ether ETFs have set their fees between 0.20% and 0.25%. However, Grayscale Ethereum Trust (ETHE), which has been trading under a different fund structure since 2017 and is now preparing for ETF conversion, has maintained its longstanding 2.5% management fee.
Grayscale is also introducing a new fund, the Grayscale Ethereum Mini Trust, with a more competitive fee structure. For the first year or until the fund reaches $2 billion in AUM, Grayscale is offering a discounted fee of 0.12% from its 0.25% baseline.
The decision by Grayscale to maintain high fees on its legacy ETHE fund, which currently manages nearly $10 billion in assets, has drawn criticism from industry analysts. Some experts argue that even the fees for the new Mini Trust may be too high to attract significant inflows, especially when compared to competitors offering lower rates.
As the launch date approaches, this fee war underscores the intense competition among ETF issuers to attract investors in the rapidly evolving cryptocurrency investment landscape. The outcome of this fee battle could significantly influence the initial success and market share of these new Ethereum ETFs.
