tl;dr
Several issuers of the spot Ethereum ETF disclosed their fee structures, with most keeping fees under 0.25%. However, the Grayscale Ethereum ETF stands out with a 2.5% fee, almost 10x higher than its competitors. This has raised concerns about potential outflows to other players with lower fees. Gra...
Most issuers of the spot Ethereum ETF revealed fees, with Grayscale charging 2.5%, potentially leading to significant outflows.
Grayscale's fee structure for the Ethereum ETF raises concerns of repeating past mistakes and short-term revenue focus.
Grayscale's submission of the Ethereum Mini Trust filing with 0.25% fees may not be competitive enough against upcoming BlackRock ETF.
The Ethereum price faces selling pressure ahead of the US SEC approval for the ETF, possibly leading to a "sell-the-news" event.
Several issuers of the spot Ethereum ETF disclosed their fee structures, with most keeping fees under 0.25%. However, the Grayscale Ethereum ETF stands out with a 2.5% fee, almost 10x higher than its competitors. This has raised concerns about potential outflows to other players with lower fees.
Grayscale's decision has been criticized, with suggestions that the high fees could lead to significant outflows. Grayscale also submitted a filing for its Ethereum Mini Trust with a 0.25% fee, but experts question if this fee is low enough to compete with other market players, such as BlackRock, whose Ethereum ETF is launching soon.
The news of the ETF approval by the US SEC next week could potentially lead to a sell-off before strong inflows resume. 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.
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.
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.
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.