On May 31, Franklin Templeton filed its amended S-1 with the SEC along with other applicants of ETH ETFs. The final outcomes of the draft document depend on the SEC’s comments and final approval.
The ETH ETF instrument of Franklin is registered as Franklin Ethereum ETF as the fund seeks to reflect the price performance of Ether coin before payment of the fund’s expenses. The exchange ticker symbol of the product will be EZET.
The Franklin Ethereum ETF also disclosed their proposed sponsor’s fee in the filed document. The proposed fee is an annualized rate of 0.19% of the NAV and, with daily compounding, is to be paid at least quarterly. It is equivalent to its BTC ETF, EZBC. The similarity with the firm’s BTC ETFs reduced the possibility of changes in the annualized rate. The ETH staking feature has also been removed from the ETH ETF.
Expectations around the Rate
A popular Bloomberg ETF analyst, Eric Balchunas, brought this update to attention. The industry expects it to be permanent and not an introductory offer based on two factors: the rate is equivalent to a similar product backed by Bitcoin, and the rate is not as low as it should be for an introductory offer to attract investors.
Analysts were expecting this rate to be a bit lower as an introductory offer and to gain market share among all the competition. The expectations were also that Franklin offered an introductory fee waiver scheme to initial investors for a certain period as it did for BTC ETF.
Impact on Other Applicants
After the fee announcement from Franklin, other applicants were also pressured to disclose their annualized rate of sponsor’s fees. Furthermore, other applicants will be forced to offer a lower rate to gain market attention, increasing market competition.
Eric Balchunas also expects an upcoming fee war among applicants for ETH ETF fees, as he took to his X account to share his views.
The opening shot in the Eth ETF fee war has been fired from Franklin. 19bps. https://t.co/n3yQsaMoYO
— Eric Balchunas (@EricBalchunas) May 31, 2024
It will be quite interesting to see whether other players will also match their fees with those of BTC ETFs or will try to offer less than Franklin; as for BTC, 0.19% was the lower rate of the sponsor’s annualized fee rate.
For BTC ETFs, most sponsors’ average fees range from 0.19% to 0.25%. However, the highest fee levels are 0.90% and 1.50%, offered by Hashdex Bitcoin ETF (DEFI) and Grayscale Bitcoin Trust (GBTC), respectively.
