The world’s largest asset manager is aiming to retain its position as leader of the spot Bitcoin ETF market following a massive exodus of capital from its flagship GBTC product.
In order to do this, Grayscale has applied for a smaller Bitcoin ETF with highly competitive fees to compete with its ten rivals.
According to its latest filing with the US Securities and Exchange Commission, Grayscale’s new ETF, the Bitcoin Mini Trust, has set fees at just 0.15%.
On April 21, Bloomberg ETF analyst Eric Balchunas reacted to the news, exclaiming:
“Wow, GBTC’s mini-me BTC will have a fee of 15bps, which means Grayscale will have the cheapest BTC ETF in the market.”
He added that this was still hypothetical and it doesn’t necessarily mean the fund fee will be 15bps. “But the good news is they had to pick a number for this and knew people would be watching, and they decided on 15bps,” he added.
The existing Grayscale Bitcoin Trust has a 1.5% fee, which is partly why it has lost so much of its assets under management compared to rival funds with lower fees.
The Franklin Bitcoin ETF (EZBC) is currently the new fund’s closest competitor, with fees at 0.19%.
Moreover, when the Bitcoin Mini Trust (BTC) is introduced, the firm will contribute 10% of the assets in GBTC to the new fund, according to the filing.
At the time of writing, this works out to a potential 30,500 BTC worth roughly $2 billion. However, the figure is likely to be lower than this if GBTC keeps seeing steady outflows until the mini-BTC fund is launched.
Additionally, shares of the new fund are to be issued and distributed automatically to holders of GBTC shares.
GBTC has now lost more than 50% of its BTC holdings since it converted to a spot ETF in mid-January. The total remaining in the fund is 304,970 BTC following a $45.8 million outflow on Friday.
Last week, Grayscale shed $458 million, though the outflows started to slow by the end of the week. Moreover, April 19 saw the first day of aggregate inflows for more than a week with $59.7 million.
On April 19, ETF Store President Nate Geraci said it was “eerily quiet on spot ETH ETFs.”
He confirmed that the consensus among industry analysts was that they would be disapproved by the SEC in late May due to the lack of engagement.