Grayscale is planning to reduce its GBTC fees shortly after announcing a mini bitcoin ETF.
Michael Sonneshein CEO of the popular digital asset management company Grayscale announced on Monday that fees on its bitcoin Exchange-Traded Fund (ETF) will come down over time as the bitcoin ETF market continues to progress.
GBTC Current Management Fees
Earlier this year, the United States Securities and Exchange Commission (SEC) approved the Grayscale Bitcoin Trust (GBTC) alongside other bitcoin ETFs. Thus, making it easier for institutional investors to acquire and trade bitcoins.
Following the approval, Grayscale has been charging 1.5% management fees, clearly higher than what is charged by BlackRock and other bitcoin ETF providers. Grayscale has defended its high fees that are above average market price. However, following the outflow of about $12 billion within two months, Sonneshein said the company expects to reduce GBTC fees in the coming months.
Grayscale manages a $26 billion bitcoin ETF and has witnessed an outflow of $12 billion, around 46% of GBTC. Grayscale recorded its highest single-day outflow on Monday with withdrawals amounting to $643 million. Whereas, other bitcoin ETFs like BlackRock have recorded an inflow of about $850M in a single day.
Speaking on the matter, Grayscale CEO said that other ETFs charge lower fees because they “do not have a track record” and that they’re trying to attract investors with fee incentives. He added “All these new issuers came into the market to compete with us” and are also rivaling each other.
“I’ll happily confirm that, over time, as this market matures, the fees on GBTC will come down,” Sonneshein said in an interview. He further explains that the company has always expected outflows because investors have been wanting to take gains in their portfolios.
Additionally, Grayscale has introduced an easier way for investors to access its bitcoin ETF at a low cost – The Grayscale Bitcoin Mini Trust, which is set to trade at a lower fee than GBTC. Existing GBTC holders can also swap to the mini GBTC without paying capital gainns tax.