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Bitcoin ETF Hopefuls Clash in Fee Battle as Approval Nears
- Spot Bitcoin ETFs may go live as soon as this week.
- The price of BTC has responded to the impending approval, with the price surging 7% in the past 24 hours.
- The fees charged for several high-profile Bitcoin funds are set to be extremely low – under 0.3%.
- It’s possible that the affordability of these ETFs will cause other funds and crypto exchanges to look into their fee schedules due to tightening competition.
After a whirlwind couple of months, the wait for a spot Bitcoin ETF finally looks over. Rumours are abound that the Securities and Exchange Commission is set to approve the crypto-based funds in the coming weeks, with live trading arriving as soon as Friday. After a slight consolidation, the crypto market has rebounded as the date draws near, with the price of BTC closing in upon USD $47K (AUD $70K) for the first time in years.
“Fee Wars” Run Hot
With the nitty gritty sorted out between the SEC and prospective ETF asset managers, the next step for financial institutions is to decide what their fee rate will be. Most of the big-name spot funds are already listed on several exchanges, so the fees for investing in these ETFs are publicly available – although subject to change. One of the key drawbacks of pushing Bitcoin into a TradFi system (like a managed fund) was supposedly exorbitant fees. However, at first glance, it appears that the major players in this space are actually charging comparable or even lower fees than several cryptocurrency exchanges.
While platforms such as Binance offer an impressive 0.1% for buying and selling BTC, the company does not manage your assets for you – custody is the investor’s responsibility. On top of this, according to Bloomberg analyst James Seyffart, the bid-ask spreads for many of the spot ETFs will be minuscule. These spreads are often undisclosed on crypto exchanges and can double (or triple) an otherwise small fee.
Some of the most impressive fee rates so far include:
- Ark 21Shares will waive fees for the first six months or USD $1 billion (AUD $1.49 billion) invested into their ETF.
- VanEck’s fund, ticker HODL, will charge a fee of 0.25%.
- BlackRock’s fund, the iShares Bitcoin Trust, will only charge a fee of 0.2% for the first 12 months of the spot ETF’s existence.
The extremely low fee rates have caused several issuers jostling for positions in the ETF race to reconsider their costs. In fact, so affordable are the spot ETFs that experts believe the fee wars will spill out of TradFi and into centralised exchanges, potentially causing major platforms like Coinbase and Gemini to lower costs for some of their services.
No matter when approval comes, spot Bitcoin ETFs appear destined to rock the crypto world – and hopefully for the better.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
