• Spot Bitcoin ETF emergence in the US is driving ripples across the globe.
• One of its effects is a massive fee reduction in the European ETF market.

In a move that indicates intense competition and a bid for investor attention, asset management firms in Europe have substantially reduced fees on their Bitcoin Exchange-Traded Funds (ETFs) by over 60%. 

Ongoing Bitcoin Price War in Europe

The dramatic fee cuts are seen as a response to the competitive environment that has emerged in the United States where similar products are gaining traction. Gary Buxton, Head of ETFs for Europe, the Middle East, Africa, and Asia Pacific at Invesco, revealed in an interview with the Financial Times that many ETF providers have adjusted their fees for spot Bitcoin ETFs to stay competitive in the market. 

The competitive landscape in the U.S. has been shaped by bold moves from prominent players, such as Cathie Wood’s Ark Investment Management, which initially launched its U.S. ETF with no fees for the first six months or until assets reach $1 billion. Subsequently, it plans to charge 0.21%.

BlackRock, another major player, is offering its product at 0.25%, with an early investor rate of 0.12% for the first year until assets reach $5 billion. This aggressive pricing strategy in the U.S. has led to a settling of the “price wars” at around 30 basis points, according to Hector McNeil, CEO of HanETF. 

He emphasizes that providers offering fees below this level might struggle to turn a profit unless they attract substantial assets under management, and many might face closure in the medium term.

Reacting to this competitive ecosystem, WisdomTree and Invesco have chosen to slash fees on their European-listed Bitcoin Exchange-Traded Products. The fees for WisdomTree’s Physical Bitcoin ETP, with a total value of $325 million, will decrease from 0.95% to 0.35%. 

Similarly, Invesco’s Physical Bitcoin ETP, valued at $137 million, will see its fees drop from 0.99% to 0.39%. These fee reductions were announced within days of each other and are set to take effect by the end of the month.

Impact of Bitcoin ETF Approval on European Investors

The impact of the launch of spot Bitcoin ETFs in the U.S. is resonating globally, including in Europe. Alexis Marinof, Head of WisdomTree Europe, noted that the U.S. launches have captured considerable attention in Europe.

“The launch of spot Bitcoin ETFs in the US is helping the crypto market to evolve as the asset class continues to stake a claim for a place in client portfolios,” he said.

US-based ETF specialist VanEck has expressed plans to be “more aggressive” in marketing its crypto products in Europe following the SEC decision. VanEck’s CEO of European business, Martijn Rozemuller, suggested that the SEC’s decision had likely enhanced VanEck’s brand in Europe, thanks to extensive media coverage.

CoinShares, a European firm, has also made strategic moves by acquiring Valkyrie Funds, an issuer of a successful Bitcoin ETF in the U.S. This decision not only expands CoinShares’ presence in the U.S. market but also diversifies its European business.