News updates : In a move that could lead to the U.S. securities regulator approving their planned spot bitcoin exchange-traded funds (ETF) this week, a number of investment managers revealed on Monday the fees they intend to charge.
In filings with the Securities and Exchange Commission (SEC), BlackRock (BLK.N), VanEck, Ark Investments/21Shares, and Bitwise, among others, stated that they anticipate sharply undercutting the average market rate for U.S. ETFs as the competition for market share intensifies ahead of an SEC approval deadline on Wednesday.
VanEck came in second at 0.25%, and Bitwise came in last at 0.24%, compared with Morningstar’s average of 0.54% for U.S. ETF products. BlackRock declared it will charge 0.30%, while Ark and 21Shares reduced their anticipated price from 0.80% to 0.25%.
Before an ETF launches, fees are usually one of the last elements to be ironed out. After ten years of trying to get the product onto the market, market participants believe the SEC will approve the spot bitcoin ETFs this week, marking a turning point for the industry.
“This is unprecedented,” stated Todd Rosenbluth, head of research at the data analytics company VettaFi. “Having a real race right out of the gate in that context is going to be … dramatic and exciting.”
Due to worries about investor protection, the SEC has already rejected all spot bitcoin exchange-traded funds. After a federal appeals court determined last year that the government erred in rejecting Grayscale’s proposal to convert its existing Bitcoin Trust (GBTC), which has a 2% fee, into a spot bitcoin ETF, hopes that the product would ultimately be approved increased.
The suggested ETF will cost 1.5%, the company announced on Monday, which is by far the highest of the fees that have been made public thus far.
Michael Sonnenshein, CEO of Grayscale, stated that the business has been in regular communication with the SEC over the product in recent months.
He said in an interview with Reuters, “It’s been very encouraging to work together to pave the way for these products to come to market.”
The competition to introduce a spot bitcoin exchange-traded fund (ETF) has placed cryptocurrency firms like Grayscale Investments against established financial giants like Fidelity and BlackRock.
Fees are one of the key differentiators for a buy and hold investor, according to Bryan Armour, an ETF analyst at Morningstar. “There’s no reason to pay more for the same exposure,” he stated.
However, liquidity will be more significant to short-term speculators than fees, according to James Angel, an associate professor of finance at Georgetown University’s business school.
Given the wide variety of projections from market participants, which range from $3 billion on its first day to $55 billion over five years, it is uncertain how much money spot bitcoin ETFs could bring in.
Standard Chartered stated in a note on Monday that it expected inflows of $50 billion to $100 billion in 2024 alone.
The cryptocurrency market, which was rocked by the FTX crash and other crypto disasters last year, has seen some trust restored thanks to hopes that the SEC will approve a bitcoin ETF.
By exposing investors to bitcoin without requiring them to keep it directly, a spot bitcoin exchange fund (ETF) might attract billions more capital to the largest cryptocurrency in the world. At $44,828, Bitcoin was up 2.01% as of late.
According to certain financial regulatory experts—such as the advocacy group Better Markets in Washington—there is a lot of fraud in the cryptocurrency industry, and authorizing the product would be a “historic mistake.”
SEC Chair Gary Gensler cautioned that investing in cryptocurrencies “may be exceptionally risky & are often volatile” in a social media post on Monday. He also mentioned that several cryptocurrency assets and platforms have gone bankrupt.
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