Grayscale CEO Promises Lower Fees for Bitcoin ETF
Grayscale CEO Michael Sonnhenshein has made a commitment to reduce the management fee of the company’s spot Bitcoin ETF. The current high cost of the fund has led to significant outflows in recent months, prompting Sonnhenshein to address the issue. In an interview with CNBC, he stated that the fee would decrease over time as the crypto ETF market matures. Grayscale had already lowered the management fee from 2% to 1.5% when it converted into an ETF on January 11, but this was still higher than other similar products on the market. Sonnhenshein defended the initial fee by highlighting Grayscale’s liquidity and track record compared to its competitors. However, he now acknowledges that reducing fees is a common practice for fund providers as their products evolve.
Lowering Fees in Response to Market Maturity
Sonnhenshein emphasized that as markets mature and funds grow, fees tend to decrease. This expectation also applies to Grayscale’s Bitcoin ETF. He recognized that starting with higher fees is typical for products in their early stages, but as they gain traction and competition increases, providers adjust their fees accordingly.
Outflows and Competition
Since becoming an ETF, Grayscale has experienced consistent outflows without a single day of net inflows. Investors have withdrawn over $12.4 billion from the fund, opting for cheaper alternatives while long-term GBTC holders cash out on their gains. Other Bitcoin ETFs, such as BlackRock’s iShares Bitcoin Trust (IBIT), have seen inflows of $12.9 billion during the same period.
A New Phase for Grayscale
Sonnenshein believes that the current phase for Grayscale is comparable to the end of the first inning. The initial demand for buying and selling has likely been fulfilled, and the market is now entering a new stage. This suggests that Grayscale may see a shift in its performance as it adapts to changing investor demands and competition.
Conclusion
The CEO of Grayscale, Michael Sonnhenshein, has acknowledged the need to lower the management fee of the company’s spot Bitcoin ETF. He recognizes that as the crypto ETF market matures, fees tend to decrease. Grayscale had already reduced its fee from 2% to 1.5% when it converted into an ETF, but this was still higher than other similar products on the market. Despite experiencing consistent outflows since becoming an ETF, Sonnhenshein remains optimistic about Grayscale’s future and expects a shift in performance as the market evolves.
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