Spot Bitcoin ETF fee war begins, issuers amend S-1 filings with lower sponsor fees

The anticipation for the decision from the United States Securities and Exchange Commission on spot Bitcoin (BTC) exchange-traded funds (ETFs) continues as multiple applicants filed their final S-1 form amendments on Jan. 8,  then again on Jan. 9 and some last m amendments on Jan. 10.

Among the initial amendments on Jan. 8, Valkyrie was the first company to file its final S-1 amendment, followed by WisdomTree, BlackRock, VanEck, Invesco and Galaxy, Grayscale, and ARK Invest and 21Shares.

Among the amendments, many of the applicants have also included lower fees, raising the bar of competitiveness between the various ETF offerings.

The lowest sponsor fee for the currently filed ETFs is from Bitwise, which updated its fee on Jan. 9, with no fee for the first six months and the first $1 billion in assets, followed by a 0.20% fee. This is followed by ARK Invest and 21Shares who updated their fees on Jan. 10 which also list no fee for the first six months or until $1 billion in assets, after which they will enforce a fee of 0.21%.

But wait, ARK just dropped their fee to 0.25% in an S-1 filed 20 minutes after BlackRock’s. Told y’all the fee war would break out bf they even launched. And this is w out Vanguard on the mix. Damn. pic.twitter.com/QVRhEXzLey— Eric Balchunas (@EricBalchunas) January 8, 2024

Bloomberg market analyst Eric Balchunas called the intial drop in ARK and 21Share’s fees from 0.80% to 0.25% on Jan. 8 “breathtaking.” Balchunas said, “The fee wars are intense, but that’s another level.”

VanEck listed a 0.25% fee, Franklin a 0.29% fee and Fidelity, which updated its fee on Jan. 9, with a 0.25% down from 0.39% fee that it listed the day prior.

Global asset manager BlackRock initially set its fee for the iShare ETF at 0.20% for the first 12 months or until the first $5 billion, then hiked it up to 0.30% as the ongoing fee. However, on Jan. 10 it slashed fees even further, cutting cut the fee to 0.25%, and 0.12% for the first $5 billion.

LOWER: BlackRock has just cut the fee on its spot Bitcoin ETF to 0.25% (and 0.12% for the first $5b). They really going for the jugular here, looking to crush the others bf they even born, just brutal. ARK has also cut to 0.21%. Bitwise curr low at 0.20%. Terrordome life. pic.twitter.com/PtSrvAinbW— Eric Balchunas (@EricBalchunas) January 10, 2024

Additional companies adjusted fees on Jan.9 including, Wisdomtree which went from 0.5% to 0.30% after no fees for the first six months and/or the first $1 billion, Galaxy Invesco offered the first six months with no fee, but dropped its fee from 0.59% to 0.39% and Valkyrie instituted a 3 month fee waiver then dropped its fee from 0.80% to 0.49%.

Hashdex has remained with its sponsor fee of 0.90%. Grayscale dropped its fee from 2% on Jan. 8 to a fee of 1.5%, which currently comes in as the most expensive of the pack.

Research and market analyst James Seyffart posted on X (formerly Twitter) to be mindful that these are not finalized and said he wouldn’t be surprised by even more fee drops.

Amid all the revisions to spot Bitcoin ETFs, Balchunas said it would be “interesting” to see if this influences cryptocurrency exchanges to respond with their own fee cuts “before it’s too late.”

Balchunas also posted a reminder that the temporary fee waivers historically haven’t “moved the needle much” and that advisors tend to focus on the regular fees because they are long-term investors.

However, he did say it could possibly matter in this case, given that the ETFs all do the same thing.

One quick note on the temporary fee waivers that we’re seeing in the bitcoin ETFs. Historically this hasn’t moved needle much (one ETF back in day actually paid you to invest in it until it reached certain aum mark but no one cared). Advisors focused on regular fee since they…— Eric Balchunas (@EricBalchunas) January 8, 2024

As the final amendments come in, the next stage in the decision-making process is anticipated to be a vote by SEC commissioners. Markets have been forecasting the debut of the ETF on or around Jan. 11.

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