Fidelity and Galaxy Set Proposed Bitcoin ETF Fees
The issuers of two proposed Bitcoin exchange-traded funds (ETFs) have reportedly set the fees they will charge if their ETFs are approved. According to a report from Fortune, Fidelity Investments will charge 0.39% per year to holders of its Wise Origin Bitcoin Trust, and Galaxy/Invesco will charge 0.59% per year for its BTCO fund. In Galaxy/Invesco’s case, the fee will be waived for the first six months of the fund’s operation. The report cited a Dec. 29 court filing as the source of the information.
Fidelity to Charge 0.39% Fee, Galaxy/Invesco to Waive Fees
Fidelity Investments has announced that if its Wise Origin Bitcoin Trust is approved, it will charge shareholders a fee of 0.39% per year. This fee is in line with industry standards for ETFs. On the other hand, Galaxy/Invesco, another issuer of a proposed Bitcoin ETF, has decided to waive its fees for the first six months of the fund’s operation before charging a fee of 0.59% per year. This fee structure aims to attract investors by offering a lower fee initially. Both Fidelity and Galaxy/Invesco are awaiting approval from the Securities and Exchange Commission (SEC) for their respective Bitcoin ETFs.
Details Revealed on Authorized Participants for Bitcoin ETFs
In a significant development, Jane Street Capital has been named as the “authorized participant” for the Bitcoin ETFs of three major issuers: Fidelity, WisdomTree, and Valkyrie. This implies that Jane Street Capital will be responsible for arbitraging any price differences between these ETFs’ shares and actual Bitcoin. Valkyrie has also named Cantor Fitzgerald as a second authorized participant. In addition, Galaxy/Invesco and BlackRock have named both JPMorgan and Virtu as their authorized participants. The selection of these authorized participants is an important step in ensuring the smooth operation of the Bitcoin ETFs.
Cash Model for Creation and Redemption of Bitcoin ETFs
The proposed Bitcoin ETFs, including those from Fidelity, WisdomTree, Invesco Galaxy, and Bitwise, will adopt a “cash” model for creation and redemption. This means that authorized participants will not directly purchase Bitcoin and deposit it into the funds. Instead, they will deposit the cash equivalent of the desired amount of Bitcoin, which will then be used by the fund to purchase BTC. This model has been chosen to address the SEC’s concerns about broker-dealers handling Bitcoin. The SEC has pushed for this solution to ensure investor protection and regulatory compliance.
Hopes Rise as SEC Considers Approval of Bitcoin ETFs
Bitcoin holders and enthusiasts have been eagerly awaiting the approval of a spot Bitcoin ETF in the United States for several years. The introduction of a Bitcoin ETF is seen as a significant milestone that could attract new investors to the cryptocurrency market and potentially drive up its price. In August, Grayscale won a lawsuit against the SEC, in which a U.S. Court of Appeals ruled that the agency had arbitrarily rejected Grayscale’s application for a spot Bitcoin ETF and must reconsider its decision. Since then, multiple new applications and revisions for Bitcoin ETFs have been filed, including those from Fidelity, WisdomTree, Invesco Galaxy, and Bitwise. While the SEC has not made an official announcement of any spot Bitcoin ETF approval yet, the consideration of these proposals has generated optimism among Bitcoin supporters.
Analyst comment
Positive news: The issuers of two proposed Bitcoin ETFs have set their fees, with Fidelity charging 0.39% per year and Galaxy/Invesco waiving fees for the first six months before charging 0.59% per year. This fee structure aims to attract investors. Fidelity, WisdomTree, and Valkyrie have named Jane Street Capital as an authorized participant for their ETFs, ensuring smooth operation and arbitraging. The proposed Bitcoin ETFs will adopt a cash model for creation and redemption to address SEC concerns. The SEC’s consideration of these proposals has generated optimism for Bitcoin supporters. Market: Optimistic, with potential for increased investor participation in the cryptocurrency market.
