VanEck Announces Zero-Fee Spot Ethereum ETF Until 2025

Key Takeaways:

• VanEck to Waive Fees Initially for Potential Spot Ethereum ETF

• Zero-fee Ethereum ETF is part of a broader strategy to capitalize on growing interest in (DeFi)

In a strategic move, investment management company VanEck has announced that its proposed spot Ethereum exchange-traded fund (ETF) will initially levy no fees. 

This groundbreaking initiative, disclosed in a recent filing with the U.S. Securities and Exchange Commission (SEC), sets VanEck apart in the highly competitive crypto ETF market.

VanEck’s zero-cost structure for its Ethereum ETF is set to last until 2025 or until the fund’s assets reach $1.5 billion, whichever comes first. Once this threshold is met, the fund will implement a 0.20% fee.

 This approach mirrors VanEck’s strategy for its Bitcoin ETF, where a similar fee holiday was offered to attract early investors and drive inflows.

According to Matthew Sigel, VanEck’s Head of Digital Assets, the firm is willing to forgo initial profits to establish itself as a leader in crypto ETF fees.

 “We aim to be a leader on crypto ETF fees even if it means we lose money at the outset,”   Sigel stated in a recent email.  “The plan is to make it up on volume; in this case, decentralized finance volume.”

VanEck to Waive Fee Initially on Spot Ethereum ETF

In an email to ETF dot com, Matthew Sigel, head of digital assets research for VanEck, wrote that the firm "aims to be a leader on crypto ETF fees even if it means we lose money at the outset."

They left out the 2nd part of the…

— matthew sigel, recovering CFA (@matthew_sigel) June 25, 2024

VanEck isn’t alone in revealing its fee structure ahead of launch. Franklin Templeton also announced a fee of 0.19% for its spot Ethereum ETF. 

However, Eric Balchunas, Bloomberg’s ETF analyst, noted that what BlackRock charges for its crypto ETFs remains the most critical and currently missing piece of information, as their fee structure is expected to influence the entire market.

Not a big deal tho, this update is mostly just a formality, unless.. they include fee. What BlackRock is going to charge is prob the single most imp missing variable outside of exact launch date. Their fee is the sun that the rest will need to orbit around. Must be nice.

— Eric Balchunas (@EricBalchunas) June 21, 2024

Earlier this month, Balchunas predicted that the first U.S.-based spot Ethereum ETFs would win SEC approval and commence trading by July 2. The SEC has already accepted applications from the CBOE, NYSE, and Nasdaq to list ETFs linked to the price of ether, paving the way for potential launches later this year.

Sigel highlighted that increased interest in Ethereum VanEck is also exploring investments in Ethereum-based DeFi projects such as Aave and Curve, underscoring its commitment to the DeFi sector.

This approach is reminiscent of VanEck’s tactics with its VanEck Bitcoin Trust (HODL), which saw its fee dropped to attract inflows, resulting in approximately $525 million in inflows to date. VanEck hopes to replicate this success with its Ethereum ETF.

Last month, the SEC approved 19b-4 forms for eight spot ether ETFs. However, the regulator must still authorize the registration statements before trading can commence. This pending approval means that the exact launch dates for these ETFs remain uncertain, but the groundwork has been laid for a significant shift in the crypto investment landscape.