Key Takeaways
- Spot Ether issuers raced to offer low fees and waivers ahead of expected approval next week.
- Grayscale Ethereum Trust will launch with a 2.5% fee, despite all other ETFs having fee rates of 0.25% or lower.
- Franklin Templeton has the cheapest offering at a 0.19% fee rate.
- Ether is up 7% over the past week, but the upcoming spot ether ETF launch is not expected to be as massive as its bitcoin counterpart.
Issuers of spot ether (ETH) exchange-traded funds (ETFs) have unveiled their expense structure in the final filings before the U.S. Securities and Exchange Commission (SEC) ahead of their anticipated regulatory approval.
Prediction market Polymarket now puts the odds spot ether ETFs will launch next week at 91%. SEC Chair Gary Gensler and various market observers had previously indicated the launch of spot ether ETFs was expected to occur this summer.
Several of these necessary filings were made on Wednesday, and they reveal more of the proposed inner workings of these new financial products. The most notable information included in these filings for potential buyers of the ether ETFs is the fee rates that will be associated with them.
Issuers Compete On Fees, Waivers
For most of the products, fees will range between 0.19% and 0.25%, and some issuers are willing to waive all or a part of those fees until the ETF hits a critical mass in assets.
Franklin Templeton’s offering—which will trade under the ticker EZET once approved—will be the cheapest with an expense ratio of 0.19%. The issuer said it will waive entirely of the fee until the fund reaches $10 billion in assets.
Blackrock’s iShares Ethereum Trust ETF (ETHA) and Fidelity’s Ethereum Fund (FETH) have pegged their fund fees at 0.25% each. BlackRock will waive half of that until the fund reaches $2.5 billion and Fidelity will not charge that fee until the end of this year. Invesco also plans to charge 0.25% for its ETF.
Bitwise and VanEck intend to have a rate of 0.2% attached to their funds, and 21Shares is out on its own with a fee rate of 0.21%, with some waivers available.
These fee rates are in the same ballpark as what was seen with the spot bitcoin ETFs when they originally launched back in January.
Some analysts, such as BitMEX Research, had wondered whether spot ether ETFs may have fees that approach zero. Analysts thought that could be the case because of the opportunity cost associated with investing via such a product, due to the inability of the underlying assets to be staked on the Ethereum network.
Grayscale Under Fire For High Fees
Grayscale, on the other hand, has received criticism for its relatively high rate of 2.5%. However, it resembles the same situation that unfolded previously with their spot bitcoin ETF product. This pricing is in line with Grayscale’s existing ether fund-Grayscale Ethereum Trust (ETHE)— which has more than $10 billion in assets and will convert to an ETF once the SEC approves its application.
Grayscale also intends to offer a new ether fund with a lower, more competitive fee rate of 0.25%, as they also planned to do for bitcoin.
“I’m not sure what Grayscale’s strategy is here,” Van Buren Capital General Partner Scott Johnsson posted on X. “Feels like they started with the right idea, then it got botched somewhere along the way. Investors selling ETHE are probably not going to be charitable with your mid-price mini option after you stick them with a 10x fee and force them to realize gains.”
Spot bitcoin ETFs have been wildly successful so far this year, breaking records for the ETF market as a whole. However, spot ether ETFs are not expected to create as large of a splash, with Bloomberg analyst James Seyffart predicting these products will see 20% to 25% of the inflows that their bitcoin counterparts experienced in their first months of trading.
Ether is up 7% over the past week around the upcoming spot ether ETF launches.