Like all other spot Ethereum ETF filers, Grayscale has revealed its sponsor fee for its proposed rule change.
Grayscale does not care about outflow
While this is not entirely shocking, considering its history with spot Bitcoin ETFs, the investment asset management firm is asking for 2.5% as fees. It is noteworthy that many potential issuers have kept their sponsor fees below 0.25%. This makes Grayscale’s fee 10x that of its competitors.
UPDATE: This is important. @Grayscale is leaving $ETHE's fee at 2.5%. As I tweeted earlier -- they are divesting 10% of the shares into $ETH right around launch but not changing $ETHE's fee at all. We don't know $ETH's fee yet but have to assume it will be low (maybe 0.15%?) pic.twitter.com/ZzETJGZCkA
— James Seyffart (@JSeyff) July 17, 2024
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From all indications, the firm has not learned from the huge outflows that its GBTC recorded within six months of launch. Senior Bloomberg ETF analyst Eric Balchunas thinks Grayscale might be making a mistake. Nate Geraci, president of ETFStore, also holds the same opinion. For now, Grayscale's Ethereum Trust (ETHE), which it plans to convert into a spot Ethereum ETF, holds as much as $10 billion in assets under management (AUM).
These analysts opine that the latest announcement from the firm may cause ETHE to follow a similar trajectory as GBTC. Should this happen, Grayscale may be poised to lose $5 billion and above, to other players with a more attractive fee structure.
Spot Ethereum ETF fee structure of Grayscale’s competitors
Franklin Templeton was the first spot Ethereum ETF filer to reveal its fee, capping it at 0.91%. Invesco Galaxy requested a unified sponsor fee of 0.25% per annum for its QETH Ethereum ETF.
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VanEck stated that it would completely waive the ETF fees for an unspecified time, until 2025 or until the assets hit $1.5 billion, whichever comes first. Thereafter, a 0.2% sponsor fee will apply for the Ethereum ETF. Similarly, Bitwise revealed a six-month fee waiver until the trust’s assets reach $500 million.
The most recent was 21 Shares, which is asking for a unitary sponsor fee equivalent to 0.21% of its Ethereum ETF. However, it plans to waive the fee for the first six months.
