Bitcoin ETF Fee War Erupts as Valkyrie, ARK, 21Shares File Amendments

• Leading Bitcoin ETF-seeking firms submit amended S-1 applications.
• The Bitcoin ETF contenders engage in a fee war, with ARK Invest and 21Shares waiving fees.
• They include Valkyrie, WisdomTree, BlackRock, VanEck, Invesco, Galaxy, Grayscale, ARK Invest, and 21Shares.

Several prominent firms have submitted amended S-1 applications for spot Bitcoin exchange-traded funds (ETFs) as they eagerly await approval from the United States Securities and Exchange Commission (SEC). Asset manager Valkyrie led the charge, followed by contenders including WisdomTree, BlackRock, VanEck, Invesco, Galaxy, Grayscale, ARK Invest, and 21Shares.

The submitted S-1 amendments include crucial details about fees, share prices, and the identities of market makers associated with the prospective ETFs. In its new resubmission, Valkyrie identified Delaware Trust Company as the trustee of the ETF and Coinbase Custody Trust Company as the initial custodian of its Bitcoin. At the same time, Coinbase, Inc., would be the prime broker of the Trust.

Notably, interested parties in Valkyrie’s Bitcoin Fund can acquire solely blocks of 5,000 shares, which cost $21 per share, with each block termed a “basket” issued in exchange for cash.

Also, Valkyrie disclosed agreeing to acquire seed baskets, consisting of 25,000 shares, at a per-share price of $21. The anticipated total proceeds to the Trust resulting from the sale of these seed baskets are $525,000. The Trust plans to utilize the proceeds from the seed baskets to acquire Bitcoin before the shares are listed on the Nasdaq Stock Market. 

Notably, a fee war has erupted among the applicants, with some slashing fees in a bid to attract investors. ARK Invest and 21Shares, for instance, announced a waiver of their 0.25% fee for the first $1 billion in transactions during a six-month period following the listing. 

Meanwhile, BlackRock’s Bitcoin ETF plans to charge 0.30% after an initial 0.2% fee for the first six months, or $5 billion in transactions.

Bloomberg ETF analyst Eric Balchunas commented on the ongoing fee competition within Bitcoin ETFs. He argued that, historically, temporary fee waivers have not significantly influenced investor decisions. Balchunas highlighted that advisors typically prioritize regular fees, considering their status as long-term investors.