The Ethereum ETF fee war heats up as VanEck offers zero fees to jumpstart its Ether fund, but staking yields could challenge these new vehicles.
Key Takeaways:
- VanEck will waive fees on its Ethereum ETF until 2025 or the fund reaches $1.5 billion in assets, whichever comes first.
- This aggressive fee strategy aims to attract investors and gain market share in the emerging Ethereum ETF space.
- Firms are waiting to see BlackRock’s fee structure, which is expected to be a key factor in determining the competitive landscape.
- Staking yields on Ether may make it challenging for Ethereum ETFs to justify their fees compared to holding the underlying asset directly.
Related: Green Light for Ethereum ETFs: Altcoin ETF on Horizon?
Ethereum ETF Landscape Gets Fiery
The battle for dominance in the Ethereum exchange-traded fund (ETF) market is heating up, with investment management firm VanEck taking an aggressive stance on fees. In a recent filing, VanEck revealed that it will be waiving the fee for its Ethereum ETF until 2025 or until the fund reaches $1.5 billion in assets, whichever comes first.
Once either of those conditions is met, the fund will then charge a 0.20% fee. VanEck’s head of digital assets research, Matthew Sigel, explained the firm’s strategy, stating, “VanEck aims to be a leader on crypto ETF fees even if it means we lose money at the outset. The plan is to make it up on volume; in this case, decentralized finance volume.”
VanEck to Waive Fee Initially on Spot Ethereum ETF
In an email to ETF dot com, Matthew Sigel, head of digital assets research for VanEck, wrote that the firm "aims to be a leader on crypto ETF fees even if it means we lose money at the outset."
They left out the 2nd part of the…
— matthew sigel, recovering CFA (@matthew_sigel) June 25, 2024
This fee-waiving approach is similar to the one VanEck has taken with its spot Bitcoin ETF, where it is not charging any fees until the fund reaches $1.5 billion or March 31, 2025, whichever comes first. The firm’s spot Bitcoin ETF has already amassed $614 million in assets, making it the sixth-largest in the market.
Out of the nine prospective Ethereum ETF issuers, VanEck and Franklin Templeton are the only two that have disclosed their fee structures so far. Franklin Templeton will be offering a 0.19% fee, the same as its Bitcoin ETF. Industry analysts believe that BlackRock’s fee announcement will be a crucial factor in determining the competitive landscape, as other issuers will likely need to orbit around the industry giant’s pricing.
Ethereum Staking Challenge
One potential challenge for Ethereum ETFs is the ability for investors to earn staking yields of around 3% by holding Ether directly. Kaiko Research analyst Adam Morgan McCarthy noted that “even paying 0.20% without the staking element seems like a nonstarter to me,” suggesting that the lack of staking opportunities within ETFs may make them less attractive to some investors.
As the Ethereum ETF race heats up, investors can expect to see continued fee competition and innovation from issuers as they vie for market share in this rapidly evolving space.
