While the US market waits for its first Bitcoin exchange-traded fund, Canada – which has already approved a few Bitcoin ETFs – moved on to the following.
Last week, the Ontario Securities Commission approved the launch of three ETFs that would provide investors with direct exposure to Ether, the second largest cryptocurrency by market cap after Bitcoin. On Tuesday, three funds holding Ether are expected to start trading on the Toronto Stock Exchange: Purpose Investments ‘Purpose Ether ETF (ticker: ETHH), CI Global Asset Management’s CI Galaxy Ethereum ETF (ETHX) and Evolve ETF’s’ Evolve Ether ETF (ETHR).
The approvals come two months after Canada released its first Bitcoin ETF, the
Purpose Bitcoin ETF
(BTCC). That ETF has already amassed C $ 1.4 billion ($ 1.1 billion) since launch proves strong investor demand for a way to hold cryptocurrencies without the hassle of securing and storing them, as well as the ability to integrate the emerging asset class into portfolios and trade with lower costs.
“While bitcoin tends to get a lot of attention for being the first major cryptocurrency, what ether and the Ethereum ecosystem represent is one of the most exciting new technological visions in society today,” said Som Seif, founder and CEO. from Purpose Investments. in a statement.
But for a space as competitive – and some may say homogeneous – as cryptocurrency funds, cost is one of the most important factors.
Days after the approval of Purpose Bitcoin ETF in February, which charges a 1% management fee, rival
Evolve Bitcoin ETF
(EBIT) followed and lowered the management fee to 0.75%. The
CI Galaxy Bitcoin ETF
(BTCX), which hit the market in early March, charges an even lower 0.40%. 3iQ came into play this week and launched the
3iQ CoinShares Bitcoin ETF
(BTCQ) on Mondays with a management fee of 1%.
Management fees aren’t the only thing investors have to pay. A fund may also charge additional fees for day-to-day activities, taxes and other expenses. The Purpose Bitcoin ETF promised that the total cost, or management expense ratio, would not exceed 1.50%. The 3iQ fund said it would forgo spending above 1.25%. The Evolve and CI Galaxy Bitcoin ETFs have not specified such caps in their prospectus.
If the strong demand for Bitcoin ETFs is any indication, the upcoming Ether ETFs are likely to see a rush of cash inflows. Unlike the Bitcoin ETFs, where the first approved ETFs had a significant first-mover advantage, all three Ether ETFs launch simultaneously and start trading on a level playing field.
Like their Bitcoin counterparts, the Purpose Ether ETF will charge a 1% management fee. The version of Evolve costs 0.75% and the CI Galaxy Ethereum ETF 0.40%. But a price war has already begun: In order to attract new investors, Evolve announced this weekend that it would waive the full management fee until May 31, making the Ether ETF essentially free. The management fee will return to 0.75% after May 31, the company said, plus applicable sales tax.
Ether has been rallying along with Bitcoin for the past year amid the cryptocurrency mania. It is down 8% since last Thursday following the public listing of cryptocurrency exchange
Write to Evie Liu at [email protected]