Bitcoin ETF Fees Revealed: Bitwise Tops the Low-Fee Table While Grayscale Bets on Size

As the Securities and Exchanges Commission (SEC) prepares to approve one or more U.S. spot bitcoin exchange-traded funds (ETFs), potential issuers have revealed a crucial detail about their products: the fee structure. With 13 proposed ETFs awaiting SEC approval, the fees charged by each issuer have become a key differentiating factor.

Lower fees, calculated as a percentage of the fund’s assets, can attract more investors by leaving them with a larger portion of their investment. Among the contenders, Bitwise, a crypto native fund manager, stands out by charging the lowest fee of 0.24% after a 6-month period of no fees. However, other competitors are not far behind, with Ark and 21Shares planning to charge 0.25%, VanEck and Franklin listing at 0.25% and 0.29% respectively.

BlackRock, the world’s largest asset manager, surprised experts by setting its fee at 0.30%, lower than anticipated given its size and reputation. This decision has been seen as a challenge to other issuers, as Bloomberg Intelligence’s ETF senior analyst Eric Balchunas noted, “Life just got a lot tougher for everyone else.”

Fidelity has set its fee at 0.39%, while Invesco and Galaxy have chosen 0.59%. Valkyrie and Hashdex have opted for higher fees of 0.80% and 0.90% respectively. Similar to Bitwise, most issuers plan to offer reduced fees for a fixed period after the introduction of their ETFs.

One notable contender is Grayscale, which aims to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. However, it plans to charge a higher fee of 1.5%, which has raised concerns among observers. Some experts believe that it may not be competitive enough compared to other applicants, with Balchunas stating, “Hard to imagine advisors picking a 1.5% ETF.” Nate Geraci, another ETF expert, also expressed skepticism, stating that Grayscale’s fee “simply isn’t going to cut it.”

It is worth noting that the average fee on ETFs in 2022 was 0.37%, according to Morningstar research. Despite the higher fee, Grayscale possesses a significant advantage in terms of size, as it already manages over $27 billion in assets. This size advantage could potentially play a crucial role in the ETF market.

In conclusion, as the SEC prepares to approve U.S. spot bitcoin ETFs, issuers have disclosed their fee structures, which vary significantly. While some issuers aim to attract investors with lower fees, others have set higher fees, potentially impacting their competitiveness. Grayscale’s decision to charge a higher fee has raised doubts among experts, but its substantial asset size may give it an edge in the market.