Ethereum ETF Fee War Heats Up as Franklin EZET Emerges as Frontrunner

Franklin Ethereum ETF (EZET) has emerged as the frontrunner in a fee war among issuers of soon-to-be-listed spot Ethereum exchange-traded funds (ETFs). As rivalries heat up ahead of next week’s anticipated listings, virtually all of the ETFs are either temporarily waiving or discounting fees, according to documents filed with U.S. regulators. The discounts range from full waivers to up to 50% fee reductions, lasting between six months to a year. Seven out of 10 proposed spot ETH ETFs are promoting fee cuts, with Grayscale Ethereum Trust (ETHE) and Invesco Galaxy Ethereum ETF staying out of the competition.

The final round of registrations for nine proposed spot ETH ETFs were filed on July 17, following the U.S. Securities and Exchange Commission’s (SEC) reported listing date of July 23 for the publicly traded funds. Franklin Templeton’s Franklin Ethereum ETF (EZET) stands out with management fees fully waived for a year or until the fund reaches $10 billion in assets under management (AUM). Its baseline fee of 0.19% is the lowest among the ETFs, contrasting with Grayscale Ethereum Trust (ETHE) maintaining its 2.5% management fee. Grayscale’s new offering, the Grayscale Ethereum Mini Trust, will be discounted to 0.12% for the first 12 months or until its AUM hits $2 billion.

Grayscale’s decision to keep high fees for the legacy fund ETHE, which has nearly $10 billion in AUM, drew criticism for not aligning with the market’s fee reductions. Despite the new Mini Trust’s more competitive fee structure, analysts remain cautious on its ability to attract significant organic flows due to existing lower-cost options in the market. Grayscale’s plan to convert a portion of ETHE shares to Mini ETF shares aims to offer existing investors the opportunity to transition to the new ETF in a tax-efficient manner.