By
Godfrey Benjamin
June 28th, 2024
VanEck has revealed that from the outset, its spot Ethereum ETF product will not come with a sponsor fee to beat competition.
Investment asset management firm VanEck is not perturbed by the losses that it might incur from a step that it is about to take on its spot Ethereum ETF. According to Matthew Sigel, the Head of Digital Assets Research at VanEck, the firm will waive fees for its potential spot Ethereum ETF once it receives approval from the United States Securities and Exchange Commission (SEC) to begin trading.
VanEck Expects Massive Volume from Spot Ethereum ETF
VanEck is making this decision as a strategy to stay competitive in the market amongst other issuers. Foreseeing that there would be losses, the financial institution says it would make it up with Decentralized Finance (DeFi) volume in this case. In light of this move, Sigel encouraged more investors to “explore the potential role Ethereum can play within their investment portfolio”.
It is worth noting that VanEck is putting effort into its potential spot Ethereum ETF even while it awaits the securities regulator’s approval for trading. The fund manager filed a Form 8-A for its Ethereum product on Tuesday. This filing marks a registration that allows issuers to trade on an exchange once the product bags the needed approval. It also reflects the progress towards spot Ethereum ETF trading.
Senior Bloomberg ETF analyst Eric Balchunas pointed out that VanEck’s move to file Form 8-A was “just part of [the] process”. He also noted that in the case of spot Bitcoin ETF, VanEck filed its Form 8-A exactly 7 days before the US SEC gave its approval for the product.
VanEck just filed 8-A form for spot Eth, which is just part of process, but.. should be noted that they filed their 8-A for spot bitcoin exactly 7 days before launch. Good sign for our July 2nd over/under (7 days from now). But again, anything poss. Sure we’ll hear more soon.. https://t.co/2BlkDnWhrz
— Eric Balchunas (@EricBalchunas) June 25, 2024
Spot Ethereum ETF Fees War Progresses
In terms of completion amongst spot Ethereum ETF filers, Franklin Templeton also did a thing with its sponsor fee. In its updated S-1 amendment filing, the asset manager disclosed that it would only charge 0.19% as a sponsor fee, setting a precedent in the spot Ethereum ETF market. VanEck’s fee was initially capped at 0.2%.
Other spot Ethereum ETF applicants are yet to reveal their sponsor fees but the position of VanEck and Franklin Templeton on the matter may likely compel them to go lower than they planned to. Judging by how high it went for its spot Bitcoin ETF (1.5%), Grayscale Investment might choose to repeat history.
However, it may also decide to consider the consequences of adopting such high fees. For GBTC, Grayscale recorded huge outflows that surpassed the outflows from other Bitcoin ETFs combined. The investment management firm saw outflows of up to $17 billion in outflows. It is therefore, very likely that the firm may have a rethink to adopt a lower fee but it is not yet certain how low Grayscale will be willing to go.