Ethereum ETF: BlackRock gains as Grayscale faces ‘angry outflows’

• Grayscale has high fees of 2.5%, which is 10 times higher than its competitors.
• BlackRock’s fee is set at 0.25% as the market expects outrage from Grayscale.

Potential Ethereum (ETH) ETF issuers updated their fee structures on Wednesday as the market prepares for potential S-1 approvals and product launches on July 23.

According to Bloomberg ETF analyst James Seyffartapproximately seven issuers have exemptions based either on period or assets held.

However, Grayscale’s ETHE had the highest fee at 2.5%, while BlackRock’s iShares Ethereum Trust set the fee at 0.25% after the waiver.

Source: X/James Seyffart

Unlike BlackRock’s 0.12% 12-month initial fee if net assets are below $2.5 billion, Grayscale’s ETHE will retain 2.5% after its trust converts to an ETF on July 23.

Ethereum ETF Fee War

This has angered market commentators. One observer, Nate Geraci of ETF Store, called Grayscale’s move a “huge failure” and that it was disappointing.

Meanwhile, Bloomberg ETF analyst Eric Balchunas warned that Grayscale’s fees were “10 times higher than the competition” and “indignation is expressed” were probable.

“Grayscale is not going down at all. That means it is 10x higher than the competition. Wow. This will probably cause some outraged outflows. I suspect the Mini ETF will be very cheap, maybe 15bps. Interesting dynamics at play.”

For perspective, indeed, the Grayscale Ethereum Mini Trust (ETH) had a similar fee structure to BlackRock’s: 0.25% with a 0.12% upfront fee. The Mini Trust apparently be separated from ETHE after conversion.

“10% of $ETHE will be automatically transferred to $ETH. $ETHE currently has $10 billion in assets, so $ETH should start life with $1 billion in assets.”

However, despite the lower fees of the Mini Trust, some market observers have predicted massive outflows from ETHE.

According to HODL15 Fixed Asset EstimatesETHE outflows could reach 50-60% due to high fees.

“Will Grayscale replicate $GBTC’s fee mistake with $ETHE? If so, expect 50-60% outflows 👇 Just over $10B in AUM.”

Source: HODL15Capital

Meanwhile, SEC Commissioner Hester Peirce has declared that ETH ETF staking could be revisited amid impending political change in the United States

On the price front, ETH’s recent rally has hit resistance at $3,500. The second-largest digital asset was trading at $3,400 at press time and could only target $4,000 if it breaks above $3,500.