VanEck is lowering its sponsor fee for its spot Bitcoin ETF just over a month after the digital asset manager launched the product, the latest in a string of cuts taken by issuers in a highly competitive market.
In a supplemental filing submitted to the Securities and Exchange Commission on February 15, VanEck said that it will be lowering its sponsor fee for its Bitcoin ETF, which trades under the HODL ticker, to 0.20% from its current rate of 0.25%. This cut will take effect on February 21.
“Our approach has always been to proactively evaluate and refine our offerings for investors in this fast-evolving and highly competitive ETF environment,” a VanEck spokesperson told Decrypt. “This fee reduction reflects our commitment to provide value and improve access to investors, and helps ensure investors continue to benefit from one of the most competitive offerings in the bitcoin ETF space.”
A Bitcoin ETF is an investment vehicle that allows buyers to gain exposure to Bitcoin without buying and storing the asset directly. That means Wall Street investors can now essentially buy into Bitcoin without the need to fuss over crypto wallets and exchanges. Interest from Wall Street in these products has so far been intense—and so has the competition among their issuers.
Even before the SEC first greenlit the launch of 10 spot Bitcoin ETFs on January 10, issuers were already beginning to lower their fees in a bid to outflank their competitors. When the ETFs became available, BlackRock and Ark Invest brought their fees down to 0.25%, while Franklin Templeton slashed its own to 0.19%, the lowest currently available on the market.
The cut to fees speaks to the heat of the competition among the ETFs to win over clients, but it is not without its pitfalls.
With the high costs that come with running a spot ETF, including expenses for security and custody, these cuts may risk becoming difficult to sustain for any issuers that are lagging right now. Taken together, they risk cutting into an ETF's profitability, especially for those with smaller war chests compared to heavyweights like Fidelity and BlackRock.
In a previous interview with Decrypt, VanEck Head of Digital Assets Research Mathew Sigel described the current state of fees as "very competitively priced," and that a more important metric to watch is the price of Bitcoin itself as being more determinative of how profitable an ETF may be.
The current price of Bitcoin is $51,668—as close as it’s been to its all-time high of just over $69,000 since late 2021.
Edited by Guillermo Jimenez. Added a comment from VanEck.