Grayscale's Bitcoin ETF to Reduce Fees as Market Matures, says CEO

Grayscale's flagship Bitcoin exchange-traded fund (ETF) is set to lower its fees, currently the highest among all United States spot Bitcoin ETFs, but this adjustment will occur only as the products "start to mature," according to CEO Michael Sonnenshein.

Speaking at Canaccord Genuity's Digital Assets Symposium on April 10, Sonnenshein stated that when commodity or specific thematic exposure products like the Grayscale Bitcoin Trust (GBTC) first enter the market, "markets have tended to be very excitable."

"We're still very much in that phase for Bitcoin," he remarked.

As these products mature over time, Sonnenshein explained, the market consolidates, with investors concentrating their funds heavily toward only a few products. This consolidation leads to a reduction in fees over time. Sonnenshein stated,

"We'll reduce fees on GBTC, and that also means that we're kind of at the end of that first inning of that first wave of adoption."

Sonnenshein noted that new products, such as the recently launched Bitcoin ETFs, typically make their way to wealth management platforms. However, he added, "Those things really haven't started happening yet. We're not quite yet at that next phase of adoption and growth here in the U.S."

GBTC, which launched in 2015 and converted to an ETF in January, alongside the launch of nine other Bitcoin ETFs after Grayscale won a lawsuit against the Securities and Exchange Commission, has the highest management fees among all U.S. Bitcoin ETFs, currently set at 1.5% a year compared to the 0.30% average of its competitors.

Since its conversion in mid-January, GBTC has seen the highest outflows among its competitors, with $16.1 billion in net outflows to April 11, according to Farside Investors data.

Source: Farside Investors

Despite this, Sonnenshein claimed that after GBTC's conversion, it emerged as a "capital markets and risk transference tool" for those seeking Bitcoin exposure, offering a large outstanding share supply, daily liquidity, and tight spread.

While Grayscale initially held "100% market share" for Bitcoin ETFs in the U.S., Sonnenshein acknowledged that other issuers entering the market "would be a net positive for the ecosystem."

"We really do believe a rising tide does lift all boats when it comes to the adoption, the maturation, the accessibility of the asset class," he concluded.

Sonnenshein also noted the involvement of some of the world's largest asset managers in the space, emphasizing the staying power of the asset class and investor demand for it.