Multiple bitcoin spot ETFs in the process of application have announced the fee structures in the updated documents submitted today. According to a table compiled by Bloomberg analyst James Seyffart, ARK 21Share and Bitwise both planned to adopt a promotional strategy with 0 management fees initially to seize market share. After the fund has been trading for 6 months or has a size exceeding $1 billion, a fee of 0.24% will be charged. Invesco also implemented a similar strategy, but with different end conditions for the promotion (6 months or a size exceeding $5 billion), and a higher fee of 0.59% after the promotion ends.
The most anticipated BlackRock iShares Bitcoin ETF will charge an initial management fee of 0.2% and increase to 0.3% after the fund has been trading for 1 year or has a size exceeding $5 billion.
Furthermore, the table shows that Grayscale has the highest fees. According to their latest submitted Bitcoin spot ETF S-3 update document, the fee rate has decreased from 2% to 1.5%, but it includes a provision for fee waivers. Therefore, the final fee rate for Grayscale’s Bitcoin spot ETF has not been determined and may be further reduced.
However, analyst Eric Balchunas believes that Grayscale maintains such a high management fee because the fund’s existing scale is substantial enough that they do not need to lower prices to compete in the market. Even if customers move to other ETFs, Grayscale can still profit from the process of customers exiting and wait to adjust fee standards in the future.
Another interesting aspect of the bitcoin ETF fee mechanism is that asset management company VanEck previously publicly committed to long-term investment in the bitcoin ecosystem and stated that once their bitcoin ETF is approved, they will allocate 5% of potential profits to bitcoin ecosystem developer Brink for at least ten years. So far, no other issuers have made similar commitments.