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Price competition with ETF fees
Companies applying for a Bitcoin spot ETF have filed new documents with the U.S. Securities and Exchange Commission (SEC) detailing the ETF, including fees and authorized participants. Some companies have lowered fees to compete with competitors.
On January 10th, the deadline for the final decision to approve or disapprove Ark’s ETF is approaching. There is also a strong view that if the SEC approves this, it will approve multiple other ETFs at the same time to ensure fairness.
BlackRock says its fees will be 0.20% for the first 12 months. After this period, it is expected to rise to 0.30%.
Ark Investment stated in its amended application on the 8th that the planned fee is 0.25%. This is a significant reduction from the previous 0.80%. Additionally, the company will waive fees for the first six months or the first $1 billion (approximately 144 billion yen) of trust assets.
Bitwise had the lowest fees at 0.24%, VanEck had the lowest fees at 0.25%, and Grayscale had the highest at 1.5%.
Bitwise, like Ark, plans to waive fees for the first six months or the first $1 billion.
According to investment information provider Morningstar, the average fee for U.S. ETF products is 0.54%. Many companies currently set fees lower than this for applying for a Bitcoin spot ETF.
Brian Armor, an ETF analyst at Morningstar, said fees are one of the most important factors in choosing an ETF for buy-and-hold investors.
On the other hand, some believe that for short-term speculators, liquidity is more important than fees.
What is Bitcoin ETF?
An Exchange Traded Fund that includes Bitcoin as an investment. An investment trust is a financial product that collects money from investors into a single fund and invests it in stocks, bonds, etc. The system is such that the investment results are distributed according to each investor’s investment amount. Among investment trusts, ETFs are listed on stock exchanges, so they can be bought and sold just like stocks.
Virtual currency glossary
connection: BlackRock expects Bitcoin spot ETF approval this week
Status of designated participants
BlackRock previously named JPMorgan Securities LLC and Jane Street Capital as authorized participants (APs) to provide liquidity. Macquarie Capital and Virtu Americas were also added as authorized participants in the filing on the 8th. It also stated that new participants could be nominated at any time.
Ark Investments describes Jane Street, Macquarie Capital and Virtu Americas as named participants.
Other named participants include Grayscale and Jane Street, Virtu, Macquarie Capital and ABN AMRO, and VanEck named Jane Street, Virtu Americas and ABN AMRO as named participants.
BlackRock and others have been consulting with authorities regarding the issuance and redemption process for physical Bitcoin ETFs and finalizing the application details.
Many Bitcoin spot ETF applicants have a “cash only” structure, where named participants purchase Bitcoin with cash in order to acquire shares in the ETF.
The SEC is supporting this “Cash only” mechanism for Bitcoin spot ETFs. The reason for this is believed to be that participants purchase Bitcoin from a highly reliable exchange, and the source of the Bitcoin becomes clear.
connection:
Learn about Bitcoin ETFs from the beginning: Explaining the advantages and disadvantages of investing and how to buy US stocks
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