With the launch of the first spot ether ETFs this week, crypto firm Grayscale faces a new competitive threat.
The first-ever spot ether exchange-traded funds have hit U.S. markets, posing a fresh challenge to crypto firm Grayscale.Jakub Porzycki | Nurphoto | Getty ImagesThe ETFs will invest directly in ether, the cryptocurrency used in the Ethereum network, allowing investors to buy the cryptocurrency the way they buy stock and bond index funds.Grayscale, founded in 2013, has spent years building a trust that holds over $9 billion worth of ether.
Grayscale began trading shares in its bitcoin trust in 2015 as a closed-end fund in what Morningstar's Bryan Armouras"something of a monopoly." In the first seven months of trading after converting from a trust to an ETF, the company saw outflows of close to $18.7 billion, according to JPMorgan, largely because its management fee of 1.5% is significantly higher than that of competitors.With ethereum, Grayscale is offering ETHE, which is charging a fee of 2.
Since becoming publicly quoted in June 2019, its ethereum trust has had an annual return of 61%, LaValle said, adding that the mini ether ETF"came to market with the lowest top line expense ratio." Between its two products, Grayscale has the highest and lowest management fees.
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