Several applicants for spot Ethereum (ETH) Exchange-Traded Funds (ETFs) recently submitted S-1 amendments to the U.S. Securities and Exchange Commission (SEC) detailing sponsor fees and waiver terms. These filings come as the applicants prepare for a potential trading launch next week. Most of the issuers have disclosed their fees and waiver terms in the latest filings, with BlackRock setting a 0.25% sponsor fee and charging only a 0.12% fee for the first 12 months or up to the initial $2.5 billion. Fidelity also set a 0.25% fee but announced a waiver of the sponsor’s fee until Dec. 31 with no other conditions. 21Shares and Bitwise added a 0.21% and 0.2% fee, respectively, which they will waive entirely for the first six months or up to the first $500 million. Grayscale introduced a 2.5% fee for its main spot Ethereum ETF, along with a 0.25% fee and 12-month waiver for its mini ETH trust valid for up to $2.0 billion. Franklin Templeton maintained its 0.19% fee and waiver for the first $10 billion in assets until Jan. 31, 2025, while VanEck and Invesco Galaxy also confirmed their fees and waiver terms. ProShares has not yet submitted fee or waiver data.
The fees and waivers proposed by these applicants have raised questions about whether the funds can attract significant inflows, especially against Grayscale’s converted ETF funds. Bloomberg ETF analyst Eric Balchunas expressed doubts about the newborn funds’ ability to offset outflows from Grayscale’s established offerings. Balchunas highlighted the potential challenges faced by new ETFs in generating net flows, particularly due to Grayscale’s 2.5% fee. However, the recent submissions represent one of the final steps towards approval. The SEC approved proposed rule changes for spot ETH ETFs on May 23, allowing exchanges to list and trade the funds, although final approval from regulators is still pending. Industry insiders anticipate that the funds will secure the necessary approvals next week and commence trading on July 23.
The applicants’ fee structures and waiver terms underscore their strategies to attract investors and compete within the ETF market. BlackRock’s decision to charge a 0.12% fee for the first 12 months or up to $2.5 billion reflects its efforts to offer competitive pricing and attract initial investment. Similarly, Fidelity’s waiver of the sponsor’s fee until Dec. 31 without additional conditions aims to incentivize investors to consider its ETH ETF offering. Other applicants, such as 21Shares and Bitwise, have opted to waive their fees entirely for the first six months or up to $500 million, demonstrating a commitment to attracting early adopters. Grayscale’s introduction of a 2.5% fee for its main spot Ethereum ETF, along with a 0.25% fee and 12-month waiver for its mini ETH trust, reflects its focus on differentiating between offerings and catering to varying investor preferences.
As the ETF market continues to evolve and expand, the introduction of spot Ethereum ETFs represents a significant development in the digital asset space. These ETFs provide investors with an accessible and regulated vehicle to gain exposure to Ethereum, potentially increasing the adoption and mainstream acceptance of the cryptocurrency. The competition among ETF issuers to offer competitive fees and attractive waiver terms reflects the growing demand for ETH investment products and the importance of differentiating offerings in a crowded market. The upcoming launch of spot Ethereum ETFs highlights the increasing maturity of the cryptocurrency market and marks a significant milestone in bringing digital assets into traditional investment vehicles.
In conclusion, the recent submissions of spot Ethereum ETF applicants detailing sponsor fees and waiver terms signal the final steps towards approval for these investment products. The proposed fee structures and waiver terms reflect issuers’ strategies to attract investors and compete in the ETF market. As regulators move closer to granting approval for spot ETH ETFs, industry insiders anticipate a potential trading launch next week, which could mark a significant milestone in the integration of digital assets into traditional investment vehicles. The competition among ETF issuers to offer competitive fees and waivers highlights the growing demand for ETH investment products and the evolving landscape of the cryptocurrency market. Investors and market participants eagerly await the launch of spot Ethereum ETFs, which could provide a new avenue for gaining exposure to Ethereum and drive further adoption of digital assets.