Grayscale Ethereum ETF to Charge Hefty 2.5% Fees, Another Blunder in Making?
Highlights
- Most issuers of the spot Ethereum ETF have kept their fees under 0.25% for the upcoming launch.
- There is concern that Grayscale's high fee structure could lead to significant outflows, similar to the $18.7 billion lost from its Bitcoin ETF.
- The Grayscale Ethereum Trust, with over $10 billion in assets, could see $5 billion or more.
Most of the issuers of the spot Ethereum ETF revealed their fee structure on Wednesday, as they prepare for the launch next week on July 23. While most of the issuers have kept fees under 0.25%, the Grayscale Ethereum ETF would be charging nearly 10x of its competitors, with 2.5% fees.
Grayscale Ethereum ETF – A Blunder In Making?
Similar to what they did with the Bitcoin Trust, Grayscale would be converting its Grayscale Ethereum Trust (ETHE) to a spot Ethereum ETF. However, it seems that Grayscale hasn’t learned enough lessons from the massive $18.7 billion outflows from its spot Bitcoin ETF.
The Grayscale Ethereum Trust has more than $10 billion in assets under management. If ETHE follows a similar trajectory as that of GBTC, $5 billion and above could easily flow to other players with an attractive fee structure.
Will Grayscale replicate the $GBTC fee mistake with $ETHE?
If so, expect 50%-60% outflows 👇 Just over $10 Billion AUM https://t.co/EB8IXDGPg4 pic.twitter.com/TFSzbnRvpZ
— HODL15Capital 🇺🇸 (@HODL15Capital) July 17, 2024
Speaking on this development, Bloomberg ETF strategist Eric Balchunas said: “Grayscale not lowering at all. This means they 10x higher than competition. Wow. Prob cause some outrage outflows. My guess is the mini me ETF will be dirt cheap tho, like maybe 15bps. Interesting dynamic at play”.
Similarly, ETH Store President Nate Geraci said that this could be a major mistake that Grayscale is repeating again. He criticized Grayscale for maximizing short-term revenue instead of playing the long-term game.
Btw, think this is *huge* miss by Grayscale…
If you’re gonna charge *2.5%* on ETHE, need to undercut market w/ mini trust.
Disappointing.
Entire pricing strategy around both spot btc & eth ETFs seems focused on maximizing short-term revenue vs playing long game. https://t.co/8DE1UIlCIo
— Nate Geraci (@NateGeraci) July 17, 2024
Also Read: Ethereum Billionaire Takes First Position In Years, Here’s What He Bought
Will mini ETH Filing Compensate?
On Tuesday, July 17, Grayscale also submitted the filing for its Ethereum Mini Trust where it would charge 0.25% fees at par with other market players. However, Blachunas stated that this still isn’t low enough to take on giants like BlackRock with its Ethereum ETF coming next week. In his message on X, Balchunas explains why would anyone choose Grayscale over a brand like BlackRock.
Cheap but not sure cheap enough to move the needle (as most are cheaper and brand name BlackRock is same fee) to attract organic flows to offset The Big Unlock. And do these newborns have enough strength to offset those outflows a la btc. Anyway short story is the 2.5% fee made… https://t.co/0sH0tXrjtL
— Eric Balchunas (@EricBalchunas) July 17, 2024
After attempting to break past the $3,500 level, the Ethereum price is currently seeing some selling pressure. It seems that the approval news next week by the US SEC could be a sell-the-news event before strong inflows resume.
Also Read: Is Ethereum ETF Approval “Sell The News” Event Like Bitcoin ETF?
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