Saturday Newsletter

Explore the latest trends, gain valuable insights, and stay informed in the dynamic cryptocurrency ecosystem.

01 June 2024

Franklin Templeton has ignited the spot Ethereum ETF “fee war” by being the first to announce its fees in an amended S-1 application, ETF analyst Eric Balchunas reports.

Franklin Templeton’s Bold Move

Franklin Templeton, a leading American investment firm, has amended its S-1 application for its proposed spot Ether (ETH) exchange-traded fund (ETF), making it the first among applicants to disclose fees to investors. According to the filing with the United States Securities and Exchange Commission (SEC) on May 31, Franklin Templeton stated:

“The fees of the Sponsor accrue daily at an annualized rate equal to 0.19% of the net asset value of the Fund.”

ETF analyst Eric Balchunas highlighted this development, stating that “the opening shot in the ETH ETF fee war has been fired from Franklin” in a social media post on the same day. He dismissed speculations about the fee being temporary, affirming its permanence as it matches the fee of Franklin’s spot Bitcoin ETF product.

Competitive Landscape

Sponsor fees, which compensate the fund manager for administration expenses, are a crucial factor for investors selecting an ETF product. Lower fees generally attract more investors. While VanEck, Invesco, and Galaxy also submitted amended S-1 applications on the same day, none disclosed their sponsor fees.

Ongoing Developments Among Applicants

The S-1 applications are mandatory registration statements filed with the SEC, detailing information about the company and the securities they plan to offer. The ongoing adjustments in these applications have been termed “fee wars” by Balchunas, especially evident before the spot Bitcoin ETFs launched in January.

In a bid to remain competitive, some issuers, like Bitwise, even waived fees for an initial period. For instance, Bitwise waived all fees on its spot Bitcoin ETF for the first six months of trading and the first $1 billion in assets.

Upcoming Changes and Expectations

Grayscale Investments and BlackRock submitted amendments on May 30 and May 29, respectively. Balchunas commented positively on these filings, predicting that other applicants would soon follow suit. He also mentioned that another round of amendments might be necessary to fine-tune SEC comments, but he is optimistic about the possibility of spot Ether ETFs launching by the end of June.