Bitcoin ETF Fee War Extends from the U.S. to European Market
Summary:
After US asset managers received approval to list Bitcoin ETFs, a trend towards lowering ETF fees has emerged, extending to European-listed ETPs. Leading asset managers, Invesco and WisdomTree, have cut fees on their ETPs drastically to compete with newly approved ETFs in the US financial market. This increased competition and fee cuts have made US ETFs more attractive to investors, which led to lower demand for European ETPs from US investors.
Just a few weeks after American asset managers received permission to list their Bitcoin exchange-traded funds (ETFs) from the United States Securities and Exchange Commission (SEC), the ETF fee reduction war has made its way to Europe. Prior to the January 10 approval, each of the 11 applicants had made several adjustments to their S-1 form in an effort to decrease their ETF charges. Now, a similar trend can be observed with exchange-traded products (ETPs) listed in Europe.
Invesco and WisdomTree, two industry leaders, have cut fees on their European ETPs by more than 60%. The Invesco Physical Bitcoin ETP, valued at $137 million, is lowering its charges from 0.99% to 0.39%, and the $325 million WisdomTree Physical Bitcoin ETP is reducing its cost from 0.95% to 0.35%.
In Europe, digital asset ETPs are set up as exchange-traded notes (ETNs) rather than funds. ETN investors own a debt security, while ETF investors own a piece of the underlying assets of the fund.
The significant fee reduction can be attributed to the growing competition and the entry of multiple ETFs in the U.S., one of the world's leading financial markets. Before, American investors often turned to Canadian and European ETPs, but with 11 approved ETFs now available in the U.S., the demand for European ETPs from American investors has significantly decreased.
Gary Buxton, the head of ETFs for Europe at Invesco, explained in an interview with Financial Times that the presence of numerous ETFs in the U.S. led to them lowering their fees to establish a new balance between supply and demand. As a result, prices have dropped significantly compared to Europe's existing ETPs.
Relative to the ETPs listed in Europe, the American Bitcoin ETFs are more liquid and available on a singular exchange platform, giving European investors greater accessibility. The newly initiated spot Bitcoin ETFs in the U.S. have already attracted billions in trading volume from their first day, and even after two weeks, they continue to generate billions in daily trading volume.
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Published At
1/23/2024 1:57:37 PM
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