Grayscale hints at lower fees for its Bitcoin ETF as market matures

Grayscale Bitcoin exchange-traded fund (GBTC) fees will gradually decrease as the market evolves, according to CEO Michael Sonnenshein.

In a March 19 CNBC report, Sonnenshein pointed out that the fee reductions would align with market maturity, saying:

“We have seen this in countless other exposures, countless other markets, you name it, where typically when products are earlier in their lifecycle, when they’re new to be introduced, these [fees] tend to be higher. And, as those markets mature, and as those funds grow, those fees tend to come down, and we expect the same to be true of GBTC.”

This statement marks a significant shift from the company’s previous stance of maintaining fees for its ETF above the market norm. The firm initially defended these fees, citing the product’s complexity and its established track record in the digital assets sector.

However, its 1.5% fee contrasted sharply with competitors’ rates, which range from 0.2% to 0.5%, with some offering fee waivers as temporary incentives.

GBTC outflows

GBTC has experienced significant outflows totaling nearly $12 billion since its January launch, partly attributed to its comparatively high fees.

Yesterday marked a milestone for GBTC, as it recorded its largest single-day outflow to date, with withdrawals reaching $643 million, according to ETF flows data compiled by Farside Investors.

Sonnenshein acknowledged these outflows, noting that the firm had anticipated them. He highlighted profit-taking investors and arbitragers exiting the fund as contributing factors. He said:

“Of course, we anticipated having outflows. Investors have been wanting to either take gains on their portfolio, or arbitragers coming out of the fund, or people unwinding positions that were part of bankruptcies through forced liquidation.”

Despite these outflows, GBTC remains the largest Bitcoin ETF, managing assets worth $24.7 billion—higher than BlackRock’s IBIT, whose assets stand at approximately $16 billion.

Meanwhile, Grayscale has filed with the Securities and Exchange Commission (SEC) for a Mini Bitcoin Trust. This forthcoming product will feature reduced fees and be backed by some GBTC shares.

If approved, existing GBTC holders could transition into the new fund without incurring capital gains tax.

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