BlackRock and VanEck have seeded their ETFs with $10 million and $72.5 million, respectively, with Bitwise planning a whopping $200 million.
Spot Bitcoin (BTC) exchange-traded fund (ETF) issuers are firing up seed investments in their prospective ETFs as they await official approval from the United States Securities and Exchange Commission (SEC). Details of recently amended S-1 forms are now coming to light in anticipation of the SEC’s first decision expected on Wednesday.
Spot Bitcoin ETF Seeds and Fee Structures
VanEck noted in its form that it has seeded its expected ETF with $72.5 million, while Bitwise noted its seed is $500,000. While Pantera Capital has not yet seeded its proposed ETF, the firm has indicated its interest in funding the ETF with $200 million upon regulatory greenlight from the SEC. BlackRock had a much bigger seed at $10 million.
The SEC had fixed Monday as a deadline for final submissions of amended S-1 forms. Reports state that several applicants, including WisdomTree, BlackRock, VanEck, Pando Asset AG, and Invesco, all filed amended forms. There were also submitted amendments from Franklin Templeton and Ark Invest/21Shares.
The filings also indicated several changes, including amendments to fee structures. For Bitwise, the ETF will charge zero fees for the first 6 months from the launch date or until the ETF accumulates $1 billion in assets. Whichever comes first, Bitwise will then charge 0.24% right after.
There also is Ark/21Shares, also charging no fees for the first 6 months or $1 billion in assets. However, Ark/21Shares will charge 0.25% after, slightly higher than Bitwise. Interestingly it originally suggested a much higher fee of 0.8%.
BlackRock has the highest fees of the three, with 0.2% and 0.3% later. However, the giant asset manager’s 0.3% will not kick in until after the first 12 months or $5 billion in assets.
Fee Waivers May Not Affect ETF
Other fees include VanEck at 0.25% and Fidelity at 0.39%. For Invesco/Galaxy, there will be no fees for the first 6 months or $5 billion in assets, and 0.59% after. According to an X post by Bloomberg ETF Analyst Eric Balchunas, “the fee wars are intense.” However, the analyst has noted that the temporary waivers do not make much of a difference in the long run. In another post, Balchunas wrote:
“Historically, this hasn’t moved [the] needle much (one ETF back in [the] day actually paid you to invest in it until it reached [a] certain AUM mark but no one cared.) Advisors focused on regular [fees] since [they are] long-term investors.”
However, Balchunas added that it just might make a difference this time if the applicants do the same thing.
Introducing low fees, and zero fees in some cases, is a way to compete for market share upon approval. ETFs with the lowest fees are likely to quickly attract more interested investors in the first few months of trading. VanEck already expects that the spot Bitcoin market will receive $1 billion in the first few days and $2.4 billion in a quarter. For Galaxy, the prediction is $14 billion in the first year, while Bitwise expects $72 billion in five years.
