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Just as happened with Bitcoin ETFs (BTC), the managers of future Ethereum ETFs started their “fee war”. The one who got the ball rolling was VanEck, which announced the exemption from management fees on its ETF.

Shortly after VanEck filed Form-8A for its Ethereum ETF on Tuesday, another filing suggested that the manager had waived fees. According to the document, the fee exemption would last until 2025, or until assets reach US$1.5 billion – whichever comes first. The company did not specify which period of 2025.

Analysts expect Ethereum ETFs to hit US exchanges on July 2, but the fee war has already begun. These fees are charged annually and serve as a way of compensating the work of each ETF’s managers.

ETFs that only track the price of a specific index or asset tend to charge lower management fees, while ETFs with more active management charge more.

VanEck seeks leadership in Ethereum ETFs

Matthew Sigel, head of digital assets at VanEck, outlined the company’s strategic approach to cryptocurrency ETFs. The executive said that the manager “intends to be a leader in ETF fees in this sector, even if that means losing money at the beginning”.

Sigel also added that the plan is to “compensate for volume; in this case, decentralized finance volume.” In other words, VanEck intends to give up money on fees, but gain from the large trading volume expected for the ETF.

Additionally, Sigel stated that VanEck is also exploring investments in Ethereum-based decentralized finance (DeFi) projects such as Aave and Curve.

New fee war

Currently, VanEck and Franklin Templeton are the only issuers that have declared fees for Ether ETFs. While VanEck zeroed out fees, Franklin Templeton said it would charge a fee of 0.19% per year.

Bloomberg Intelligence ETF analyst Eric Balchunas said issuers typically don’t disclose their fee structure until late in the launch period. Furthermore, the analyst said that the other managers are awaiting the position of the giant BlackRock, which also did not disclose the rates for its Ethereum ETF.

“What BlackRock will charge is probably the most important variable. Your rate is the axis around which the rest will need to orbit,” Balchunas said.

Removing the staking feature from ETFs would be a crucial factor in deciding ETF fees. With direct investments in Ether, investors can earn an additional 3% yield on staking. Without service income, ETF issuers will have to put in extra effort to attract investors to invest in these funds.

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