What we learned from the latest ETH ETF filing dump
A fee war is brewing; Ark Invest for now ditches its plan to enter the spot ether ETF arena with 21Shares
Skorzewiak/Shutterstock modified by Blockworks
A new slate of amended spot ether ETF applications are in, and at least one more round is expected before the products are able to launch.
The latest document dump suggests another fee battle is in store and revealed that one issuer has decided to focus more on bitcoin.
While the Securities and Exchange Commission on May 23 approved 19b-4 proposals filed by Cboe, NYSE Arca, and the Nasdaq to list such funds, the regulator now turns to finalizing S-1 registration statements as a last step before launch.
Read more: On the Margin Newsletter: What needs to happen before ETH ETFs hit your brokerage accounts
BlackRock revealed its $10 million in seed capital and authorized participants for its fund on Wednesday. But as more filings flooded in late Friday, one of the biggest takeaways was the planned price point of 0.19% for Franklin Templeton’s ether fund.
The $1.6 trillion asset manager was the first to reveal its proposed fee, setting the stage for an expected fee war similar to what we saw in January among bitcoin ETF issuers.
Franklin Templeton had undercut Bitwise to become the cheapest bitcoin ETF a day after those funds launched in January.
Nate Geraci, president of The ETF Store, said he expects the spot ether ETF fee war to be “every bit as brutal and bloody” as the one surrounding BTC funds — adding that the two battles are tied together.
“Fee competition in one category will likely impact the other, because end investors will expect comparable pricing on both,” Geraci told Blockworks.
Sumit Roy, a senior analyst at ETF.com, said fee waivers are likely to play a role again as well. Permanent expense ratios could hit as low as 0.15%, he guessed.
“The 0.19% fee is super low, but I wouldn’t be surprised to see it undercut at some point,” Roy said.
Another main takeaway from the filing was the omission of Ark Invest’s name. The firm focused on disruptive innovation had partnered with 21Shares to launch a spot bitcoin ETF in January. The Ark 21Shares Bitcoin ETF (ARKB) has roughly $3.2 billion assets under management.
A 21Shares spokesperson confirmed the fund will continue to try to launch the 21Shares Core Ethereum ETF without Ark Invest as a partner. The two companies remain “committed partners” for ARKB and a range of futures-based products, the representative noted.
Read more: Ark anticipates win in US crypto ETF battle with ‘deepest’ suite, COO says
An Ark Invest spokesperson told Blockworks in an email that the firm views bitcoin as “a public good that everyone should be able to access at a low cost.”
“As for Ethereum, Ark believes in its transformative potential and the long-term value of the Ethereum blockchain but, at this time, Ark will not be moving forward with an Ethereum ETF,” the representative added. “We will continue evaluating efficient ways to provide our investors with exposure to this innovative technology in a way that unlocks its full benefits.”
Among the benefits missing from the current slate of planned spot ether ETFs is the yield gained from staking — a process of depositing ETH to help secure the Ethereum blockchain.
Read more: Spot ETH ETFs without staking miss the mark
The effort of all issuers getting their amended S-1s in by the end of last week points to timely movement on getting these funds prepped for launch.
A source familiar with the filings told Blockworks the SEC has given issuers “informal guidance” that it will offer comments on their S-1 amendments by the end of this week.
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