Franklin Templeton Fires First Shot in Ether ETF Fee War

American multinational investment firm Franklin Templeton has taken a significant step in the competitive race to launch a spot Ether (ETH) exchange-traded fund (ETF). 

On May 31, the firm filed an amended S-1 application with the United States Securities and Exchange Commission (SEC), becoming the first among the Ether ETF applicants to disclose the fees associated with its proposed product.

Franklin Templeton Reveals ETH ETF Fees

In the filing, Franklin Templeton revealed, “The fees of the Sponsor accrue daily at an annualized rate equal to 0.19% of the net asset value of the Fund.” This disclosure marks a pivotal moment as it sets the tone for what Bloomberg ETF analyst Eric Balchunas has termed the “ETH ETF fee war.” Balchunas highlighted this development on social media, noting, 

“The opening shot in the ETH ETF fee war has been fired from Franklin,” and emphasized that this fee structure appears to be a permanent fixture, similar to Franklin’s spot Bitcoin ETF product.

No Competitor has Disclosed Sponsor Fees

Sponsor fees, which are fees paid to the fund manager for administration expenses, play a crucial role in the competitiveness of ETF products. Investors often gravitate towards ETFs with lower fees, making this a key differentiator among competing products. 

While other firms like VanEck, Invesco, and Galaxy also submitted amended S-1 applications on the same day, none of these applications included disclosed sponsor fees, further highlighting Franklin Templeton’s strategic move.

Franklin Templeton Initiates Fee War

The absence of fee disclosures from other applicants underscores the competitive landscape. As Balchunas pointed out, “Also no fees in any of the new S-1s. Fee war on hold for now.” This situation draws a parallel to the “fee wars” witnessed before the launch of spot Bitcoin ETFs in January. 

During that period, several issuers adjusted their fees multiple times, with some even waiving them entirely to attract investors. Notably, Bitwise waived all fees on its spot Bitcoin ETF for the first six months of trading and for the first $1 billion in assets, exemplifying the lengths to which firms will go to gain a competitive edge.

Launch of ETH ETFs

In the context of the ongoing Ether ETF race, Balchunas expressed optimism about the timeline for the launch of these products. He noted that Grayscale Investments and BlackRock submitted amendments on May 30 and May 29, respectively, and commented that more filings would likely follow soon. “Good sign. Probably see rest roll in soon,” he said, adding that there will likely be another round of amendments to address SEC comments.