Franklin Templeton, an American multinational investment firm, has made amendments to its S-1 application for its proposed Ether (ETH) exchange-traded fund (ETF) product. It is the first among the applicants to disclose fees to investors.
In a filing with the United States Securities and Exchange Commission on May 31, Franklin Templeton stated, “The fees of the Sponsor accrue daily at an annualized rate equal to 0.19% of the net asset value of the Fund.” Bloomberg ETF analyst Eric Balchunas referred to this move as “the opening shot in the ETH ETF fee war” in a post on the same day. Balchunas dismissed the possibility that it might be a temporary measure, stating that it “looks permanent” since it is the same fee as Franklin’s spot Bitcoin ETF product.
The sponsor fees, which compensate the fund manager for administration expenses, play a significant role in the competitiveness of ETF products, as investors generally choose products with the lowest fees. While VanEck, Invesco, and Galaxy also submitted amended S-1 applications on the same day, none of them disclosed sponsor fees. Other Ether ETF applicants have yet to disclose their sponsor fees.
S-1 applications are registration statements that companies must file with the SEC, providing detailed information about the company and the securities they intend to offer or issue. Balchunas noted that there were no fees disclosed in any of the new S-1s, suggesting that the fee war is currently on hold.
Balchunas previously referred to the constant amendments in S-1 filings for fee adjustments as the “fee wars” when the spot Bitcoin ETFs were launched in January. Some issuers even waived fees entirely in an effort to enhance their competitiveness. For example, Bitwise waived all fees on its spot Bitcoin ETF for the first six months of trading and the first $1 billion in assets.
In related news, Grayscale Investments and BlackRock submitted amendments on May 30 and May 29, respectively, indicating progress towards launching Ethereum ETFs. Balchunas commented at the time that this was a positive development and predicted that others would follow suit soon. He also stated that it is likely there will be another round of amendments to address SEC comments, but he believes that spot Ether ETFs could be launched by the end of June, which is a realistic possibility.