Grayscale took a strategic step by cutting its proposed fee for its spot Ethereum (CRYPTO: ETH) ETF by a significant 40%, thereby trying to gain an edge over competitors in the imminent asset race.
What Happened: Grayscale revised its intended sponsor fee for the Ethereum Mini Trust to 0.15%, a substantial drop from the initially proposed 0.25% fee, The Block reported. The full waiver is at $2 billion. The original fee was on par with similar offerings by BlackRock and Fidelity, as well as a proposed fund by Invesco and Galaxy.
The revised fee now undercuts rival funds by Franklin Templeton (0.19%), VanEck (0.20%), Bitwise (0.20%) and 21Shares (0.21%).
Grayscale is gearing up to convert its Ethereum Trust (OTC:ETHE) — which currently manages about $10 billion in assets — into an ETF. The fee for this product is expected to remain at 2.5%. The firm has structured its Mini Ethereum Trust such that 10% of ETHE's ether holdings are channelled into the cheaper product.
Scot Johnsson, partner at VB Capital, thinks the fund make a smart decision:
Lowered to 15 bps, with full waiver for first $2 bn. This is what I was expecting yesterday. Grayscale wised up. pic.twitter.com/nyuuDuTUxq
— Scott Johnsson (@SGJohnsson) July 18, 2024
Also Read: Why Ethereum ETFs Mean Crypto Could Make 'New All-Time High' Soon
Why It Matters: Grayscale's strategic move to reduce its proposed fee not only gives it a competitive edge in the upcoming asset race but also exerts pressure on other investment giants like BlackRock to enhance their product marketing efforts.
This development could potentially reshape the landscape of the investment market, compelling other firms to reconsider their fee structures to stay competitive. The impact of this fee reduction on Grayscale's market position and the broader investment market will be closely watched in the coming days.
What's Next: The influence of Ethereum as an institutional asset class is expected to be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on Nov. 19.
- Ethereum ETFs To Attract Over $5B In Inflows, But Returns Could Be Lower Than Expected: Citi
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