Grayscale and Cathie Wood, two of the biggest names in cryptocurrency investing, have gone down remarkably different pricing routes following the joint approval of the spot-bitcoin ETFs.
In a risky move, the $27 billion Grayscale Bitcoin Trust, which has been admitted for trading on NYSE Arca under the GBTC ticker, has placed a hefty 1.5% management fee on the fund.
Although this marks a 50-basis-point reduction when compared to GBTCs 2% fee when it was a closed-ended trust, it is still a substantial premium to all other offerings coming to market.
Take the ARK 21Shares Bitcoin ETF (ARKB), the new bitcoin fund offered by Cathie Wood’s high-profile Ark Invest business.
ARKB will be fee-free for the first six months or, until the first $1 Billion in assets under management is achieved, and will only be 0.21% after that.
In simple maths, that makes GBTC more than seven times more expensive to own in your portfolio than ARKB.
The jury is out on whether Grayscale's size and first-mover advantage will justify this premium, especially considering Wood’s extensive track record in managing large-scale tech-focused ETFs.
When asked about the fee, Grayscale’s chief legal officer Craig Salm stated that “we’re ready for a world of competition” when speaking to Proactive at the end of 2023.
He said: “I think the more investment vehicles you have, from the different kinds of issuers whether it's traditional finance or crypto-focused, the better for the end investor.
“It's all about choice and folks being able to allocate their investments into Bitcoin, through whatever wrapper, whatever issue where they want.
“We've been very vocal that we will be reducing the fee on GBTC upon GBTC operating as an ETF, and looking forward to seeing how that environment plays out.”
You can’t accuse Grayscale of a lack of confidence, but ultimately, market demand will be the biggest driver in the bitcoin ETF pricing war.