Spot Bitcoin ETF: VanEck Switches Gear With 20% Fee Slash

The fee war between spot Bitcoin ETF issuers has not abated but rather, it stealthily intensifying with one of the asset management firms switching the gear with a fee slash.

VanEck Slashes Spot Bitcoin ETF Fee to 0.2%

VanEck has submitted a filing with the United States Securities and Exchange Commission (SEC) detailing its intention to reduce the sponsor fee for its spot Bitcoin ETF by 5 bps. Before now, VanEck’s Bitcoin ETF had a fee of 0.25% but with the intended reduction, its sponsor fee would become 0.20%. 

The new development would be effective as of February 21.

🚨NEW: Fee wars are still alive and well in the $BTC spot ETF competition as @vaneck_us announces it will reduce its free to 0.20% from 0.25% starting February 21st. https://t.co/EEliidJQPh

— Eleanor Terrett (@EleanorTerrett) February 15, 2024

This move will make VanEck one of the spot Bitcoin issuers with the lowest sponsor fee alongside Bitwise and Valkyrie. Many of the asset management firms adopted this strategy of reducing their sponsor fee after the SEC greenlighted the numerous applications in January. About two weeks ago, the duo of  Invesco and Galaxy Digital made a similar filing to the agency, notifying the SEC of an update in its fees.

According to Invesco Galaxy, they decided to cut down the fees for their Bitcoin ETF from 39 bps to only 25 bps, a reduction of 14 bps. This was after the issuer had introduced a fee waiver of 0% designed to last for the first six months after the spot Bitcoin ETF was launched. 

A few of the spot Bitcoin ETFs with a sponsor fee of 0.25% are Fidelity’s FBTC, Valkyrie’s BRRR, and BlackRock’s IBTC.

Grayscale Maintains Huge Sponsor Fee

While the other issuers are adopting lower fees, Grayscale Investments seems confident about its 1.5% sponsor fee. Michael Sonnenshein, the CEO of the firm strongly believes that the company can uphold the hefty fee, citing the trust’s unmatched track record and diversified investor base.

He opines that the other spot Bitcoin ETF issuers with lower fees are only adopting the strategy to entice investors but at the same yield, he believes that they may not be able to sustain the tactic. However, looking at the market, many of these investors that are allegedly trying to ‘entice’ investors, are currently performing better than Grayscale GBTC in terms of relative inflows into their respective ETF products.

The volume of outflows on Grayscale suggests to analysts that the spot Bitcoin ETF may be heading for the bear. On the other hand, the broad Bitcoin ETF market has witnessed up to $4.1 billion in inflows with the volume soaring as adoption grows.