Bitcoin ETF approval will spark a battle for lowest fees

investmentnews.com:

Fresh off a pivotal win in court this week, Grayscale Investments LLC may soon find itself in another fight: the $7.5 trillion US exchange-traded industry’s never-ending contest over fees.

A ruling Tuesday overturned the Securities and Exchange Commission’s decision to block Grayscale’s bid to convert its $17 billion Bitcoin trust into a physically backed ETF. While the action potentially paves the way for the firm to attract a fresh wave of investors, there’s just one thing: The product carries a 2% fee in its current form. That compares to an average of 0.54% across US-listed ETFs, and 1.48% for crypto exchange-traded products globally, Bloomberg Intelligence data show. 

That disconnect means that Grayscale’s Bitcoin trust, known as GBTC, faces a dilemma over fees should the SEC finally give its blessing to spot-Bitcoin ETFs. Asset-management titans including BlackRock Inc., Invesco Ltd and Fidelity Investment — known for their low-cost lineups — all have similar applications filed with the SEC, which the regulator is expected to respond to in the coming days. Fees aren’t yet listed for their proposed products, though history suggests it’ll be a fraction of what GBTC charges.

“Grayscale is up against issuers such as BlackRock and Invesco who are highly accustomed to bludgeoning each other on fees,” said Nate Geraci, president of The ETF Store, an advisory firm. “Spot-Bitcoin ETFs will all generally look the same – they simply hold Bitcoin — which makes fees a key differentiator.”

Grayscale’s Chief Executive Officer Michael Sonnenshein reiterated on Bloomberg Television Wednesday that the firm is “committed to lowering fees when GBTC converts to an ETF,” but declined to specify by how much. On Thursday, a Grayscale