The race to reduce fees on Ethereum spot exchange-traded funds (ETFs) is on, as applicants aggressively reduce costs to attract investors.
Experts note that fee wars are common in the ETF industry, as issuers tend to reduce their expense ratios to attract inflows. The crypto industry experienced this firsthand during the January approval process for Bitcoin spot ETFs by the SEC.
A fee war is coming for Ethereum ETFs
Bloomberg analyst Eric Balchunas noted that the industry has seen its “opening shot in the ETH ETF fee war.”
This came after Franklin Templeton submitted its revised application to the SEC on May 31. At the time, it announced a 0.19% fee for its proposed Ethereum spot ETF.
Additionally, the company said it would waive fees on the first $10 billion in assets for the first six months.
“The Sponsor Fee accrues daily at an annualized rate equal to 0.19% of the Fund’s net asset value and is payable at least quarterly in arrears in U.S. dollars or in kind or any combination thereof. The Sponsor may, in its sole discretion and from time to time, waive all or a portion of the Sponsor Fee for specified periods of time,” the notice said.
This move has therefore sparked speculation that the Ethereum ETF market will experience its own “fee war” between applicants.
Nate Geraci, president of ETF Store, said that the Grayscale ETH mini trust fee would be the “most interesting fee to watch.”
Geraci's opinion is not surprising, considering that the investment firm's Bitcoin fund experienced significant outflows due to its high fees compared to its competitors.
“Are they going for the jugular or not? In any case, it is clear that ETH spot ETFs will be priced similarly to BTC spot ETFs,” Geraci adds.
As the community's attention seems fixed on the looming fee war, other ETH ETF applicants have updated their SEC filings.
The most notable change came with 21Shares’ application, which removed all mention of Ark Invest. The ETF has been renamed from “Ark 21Shares Ethereum ETF” to “21Shares Core Ethereum ETF.”
In response to this change, Ark Invest reportedly stated that it believes in the potential of Ethereum. In the meantime, it is looking for efficient ways to provide its investors with access to the asset.
“ARK believes in the transformative potential and long-term value of the Ethereum blockchain, but at this time, ARK will not be moving forward with an Ethereum ETF. We will continue to evaluate efficient ways to provide our investors with exposure to this innovative technology in a way that unlocks its full benefits,” ARK stated.
