Ethereum
Franklin Templeton Updates Spot Ethereum ETF with 0.19% Fee
The Ethereum ETF sponsorship fee war is about to begin as investment asset management firm Franklin Templeton just disclosed its 19 basis points (bps) sponsorship fee.
0.19% Sponsorship Fee Sets Precedent for Spot Ethereum ETFs
After receiving approval from the U.S. Securities and Exchange Commission (SEC) on the Ethereum ETF’s proposed rule change, applicants also needed to obtain approval for S-1 registrations in order to begin trading . Franklin Templeton finally recently filed an updated version of its S-1 application in response to the SEC request
that all updated S-1 filings be submitted by Friday. In the Franklin Templeton filing, the ETH ETF issuer revealed that it will only charge 0.19% as a sponsor fee.
It should be noted that this fee sets a precedent for other issuers of spot Ethereum ETFs as they also submit their S-1 filing. Franklin Templeton Spot Bitcoin ETFs also have a 0.19% fee, but that was after a Reduction of 10 basis points. At the time, this made the company the lowest-fee Bitcoin ETF issuer among its competitors.
Similarly, Franklin Templeton introduced a fee waiver for the first six months after introducing its spot Bitcoin ETF to the market. It is not yet clear whether the same treatment will be given by issuers to newly approved Ethereum ETFs.
Will Grayscale change its 1.5% fee priority?
In the case of Bitcoin ETFs, issuers like Grayscale Investments set what analysts considered outrageous sponsorship fees that its CEO Michael Sonnenshein tried to defend.
Sonnenshein justified his 1.5% sponsor fee citing the trust’s impressive 10-year track record, extensive market liquidity, and Grayscale’s specialized focus as a crypto specialist. Given the ETF’s slow performance amid multiple capital outflows, it didn’t take long for GBTC fees to be revised. Over the long term, most spot Bitcoin ETF issuers ended up with fees of around 0.19% and 0.25%.
Given that Franklin Templeton has set its sponsorship fee at 0.19%, its peers, including BlackRock, are likely to set fees around that figure, if not exactly the same. Often, these fees will intensify competition among ETF issuers and can determine which issuer will dominate the market.
Meanwhile, these spot Ethereum ETF issuers are expected to undergo at least two additional rounds of updates before a final listing decision.
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