VanEck to Waive Fee Initially on Spot Ethereum ETF

VanEck to Waive Fee Initially on Spot Ethereum ETF

The giant issuer will charge 0.2% for the proposed product if it surpasses $1.5 billion in assets.

ETF.com
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Contributing Editor
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Reviewed by: etf.com Staff
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Edited by: Ron Day

VanEck will waive its fee on its proposed spot Ethereum ETF for a period that could extend into 2025 unless the fund reaches $1.5 billion in assets before then, and it will charge 0.2% after the ETF hits that threshold, the giant issuer said in an amended S-1 prospectus filed Friday. 

"If the Trust's assets exceed $1.5 billion prior to [.] 2025, the Sponsor Fee charged on assets over $1.5 billion will be 0.20%," VanEck said in its filing, adding: "After [.] 2025, the Sponsor Fee will be 0.20%."

The New York-based company, which has $102 billion in assets under management, is the second issuer after Franklin Templeton—which is charging 0.19% for its spot Ethereum fund—to state its fee in what seems likely to morph into a fierce competition similar to the one that occurred earlier this year among spot bitcoin ETFs. The seven other issuers with spot Ethereum applications before the Securities and Exchange Commission have yet to announce their fees, most notably BlackRock, wrote Bloomberg Senior ETF Analyst Eric Balchunas in a post on X/Twitter. 

"What BlackRock is going to charge is prob the single most imp missing variable outside of exact launch date," Balchunas wrote. "Their fee is the sun that the rest will need to orbit around."

Earlier this month, Balchunas forecast that the first U.S.-based would win SEC approval and begin trading on July 2. The nine funds are based on the ongoing price of ether, the token of the Ethereum blockchain and second largest crypto by market value. 

Read More: Spot Ether ETFs Likely to Debut by July 2: Report | etf.com

The application for a spot bitcoin ETF last June by BlackRock, the world's largest asset manager, seemed to jar the SEC into action, and its BlackRock Bitcoin Trust (IBIT), which charges a 0.12% fee, has generated a massive $17.6 billion in inflows, more than any of the other 10 funds that began trading Jan. 11, according to data from U.K.-based asset manager, Farside Investors. Several funds are currently charging 0%, according to etf.com data. 

Similar Approach to HODL

VanEck's Ethereum approach emulates the model that the firm adopted for its VanEck Bitcoin Trust (HODL) some two months after debuting that spot bitcoin fund to bolster inflows, which lagged a number of the other issuers. VanEck dropped its fee on the fund until March 31, 2025, unless the ETF reaches $1.5 billion in assets, at which point it will charge 0.2%. HODL has had about $525 million in inflows.

etf.com: HODL flows

In an email to etf.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."

He added that the firm hoped that competitive fees would "encourage more investors to explore the potential role Ethereum can play within their investment portfolio."

According to crypto data provider CoinMarketCap, ether was recently trading below $3,300, down 12% over the past month—part of a larger sagging in crypto markets.

Read More: Pantera Eyes $100M of Spot Ether ETF Shares

James Rubin is a contributing editor for etf.com, where he produces the Morning Exchange and Weekly Exchange newsletters. A longtime financial writer, editor and book author, he formerly held positions as a news and markets editor for the Americas at CoinDesk, where he focussed on cryptocurrencies. 

He provided editorial guidance for a Wall Street Journal best-selling book on Bitcoin and oversaw a startup newsroom focused on digital financial assets. He has edited for TheStreet and Unchained, where he wrote daily news stories about the trial of fallen crypto entrepreneur Sam Bankman-Fried. His writing has also appeared in The Hollywood Reporter, Forbes.com, AdWeek, Bankrate, The Financial Brand and The Wall Street Journal. He has also written for Forbes Insights and the Economist Intelligence Unit, including papers presented at World Economic Forums in Davos and Mumbai. 

James is the co-author of The Urban Cyclist’s Survival Guide (Triumph Books) and has been interviewed about bike safety on a number of NPR affiliates. In a prior career, Rubin was a world-ranked tennis player, once competing in Wimbledon’s qualifying rounds. He speaks fluent German and is a graduate of the Columbia University Graduate School of Journalism and received his BA at Columbia University.