VanEck will launch spot ETH ETF with zero management fee

What’s new? Investment firm VanEck has disclosed the management fee for its Ethereum-based spot exchange-traded fund (ETF) in its filing with the US Securities and Exchange Commission (SEC). VanEck does not intend to charge a fee at launch: it will remain at 0% until the fund’s assets under management reach $1,5 billion, or until an as yet unspecified date in 2025. Thereafter, the fee will be 0,20%.

VanEck’s application

What else is known? Currently, spot ETH ETFs are not yet traded on the US market, but the SEC and potential issuers have completed a number of actions to move toward their approval. For example, last month the SEC approved applications from stock exchanges intending to list fund shares (Form 19b-4), and now the regulator is reviewing the companies’ own documents on the registration of these shares (Form S-1).

On June 25, SEC Chairman Gary Gensler said at a Bloomberg conference that the application review process is “going smoothly” and that investment companies have provided all the necessary information. At the same time, he declined to specify the timing of the launch of the funds, also rejecting the question of whether they could appear before the presidential election in November.

In preparation for the launch of the spot ETH ETF, VanEck filed a Form 8-A12B application on the same day. Bloomberg analyst Eric Balchunas considered this a good sign, as in the case of spot BTC ETFs, the company filed such an application seven days before the funds were approved. Bloomberg previously allowed that ETH ETFs could be approved on July 2, and that date is just a week away.

Source: X.com

Regarding the zero fee at launch, VanEck’s head of digital asset research Matthew Sigel said the following: The firm “aims to be a leader on crypto ETF fees even if it means we lose money at the outset. The plan is to make it up on volume; in this case, decentralized finance volume.”

Source: X.com

Sigel explained that launching an ETF could spur more activity on the Ethereum network, increasing fees and the volume of fee coins burned. This, in turn, could lead to a rise in the ETH exchange rate, increasing the value of the company’s savings. However, he noted that such a development is not guaranteed.

Source: X.com

He also hinted that VanEck may start working with Ethereum-based DeFi protocols such as Curve and Aave.

Source: X.com

VanEck is taking a similar approach to fees with its spot BTC ETF, which began trading under the ticker HODL on the CBOE exchange on January 11 this year. There are no management fees until the fund’s assets reach $1,5 billion or until the fund’s maturity date of March 31, 2025.

At the time of writing, HODL holds $611,57 million worth of bitcoins, making it the sixth largest spot BTC ETF. Total inflows into HODL totaled $518 million, making it the fifth largest by this metric.

Once one of the conditions is met, HODL’s fee will be 0,25%. The company will allocate 5% of its management fee profits to Brink’s NPO, supporting the development of open-source projects on the Bitcoin network.

As for spot ETH ETFs, issuers will not be able to stake coins purchased on behalf of investors, while users directly buying ETH can block their coins through exchanges and DeFi protocols and receive returns of more than 3% for participating in the network.

Eric Balchunas believes that fees on ETH ETFs will be at the same level as BTC ETFs, or even lower. He also notes that the BlackRock fund management fee, which is the largest investment company in the world, will act as a benchmark for other issuers. However, so far, apart from VanEck, only Franklin Templeton has disclosed the fee: it will be 0,19%, as it is for its bitcoin fund EZBC.

Source: X.com

Balchunas allowed the possibility that the actions of VanEck and Franklin Templeton will put pressure on BlackRock, which will be forced to set the fee below 0,30%.