While the U.S. market waits for its first Bitcoin exchange-traded fund, Canada—which has already approved a few Bitcoin ETFs—moved on to the next thing.
Last week, the Ontario Securities Commission approved the launch of three ETFs that would offer investors direct exposure to Ether, the second-largest cryptocurrency by market capitalization after Bitcoin. On Tuesday, three funds that hold Ether are expected to start trading on the Toronto Stock Exchange: Purpose Investments’ Purpose Ether ETF (ticker: ETHH), CI Global Asset Management’s CI Galaxy Ethereum ETF (ETHX), and Evolve ETFs’ Evolve Ether ETF (ETHR).
The approvals come two months after Canada approved its first Bitcoin ETF, the
Purpose Bitcoin ETF
(BTCC). That ETF has already amassed C$1.4 billion ($1.1 billion) since launch, proving strong investor demand for a way to hold cryptocurrencies without the hassles of securing and storing them, as well as the ability to integrate the emerging asset class into portfolios and trade with lower costs.
“While bitcoin tends to get a lot of attention as it was the first major cryptocurrency, what ether and the Ethereum ecosystem represent is one of the most exciting new technology visions today in society,” Som Seif, founder and CEO of Purpose Investments, said in a statement.
But for a space as competitive—and some might say, homogeneous—as cryptocurrency funds, cost is one of the most important factors.
Days after the approval of Purpose Bitcoin ETF in February, which charges a management fee of 1%, rival
Evolve Bitcoin ETF
(EBIT) followed suit and cut its management fee to 0.75%. The
CI Galaxy Bitcoin ETF
(BTCX), which came to market in early March, charges an even lower 0.40%. 3iQ entered the game this week, launching the
3iQ CoinShares Bitcoin ETF
(BTCQ) on Monday with a management fee of 1%.
Management fees are not the only thing investors will need to pay. A fund might also have additional charges covering day-to-day operations, taxes, and other expenses. The Purpose Bitcoin ETF promised its total cost, or the management expense ratio, would not exceed 1.50%. The 3iQ fund said it would waive any expense above 1.25%. The Evolve and CI Galaxy Bitcoin ETFs didn’t specify any such caps in their prospectus.
If the strong demand for Bitcoin ETFs is any indication, the coming Ether ETFs are likely to see a rush of cash inflows. Unlike the Bitcoin ETFs, where the first one approved had a significant first-mover advantage, all three Ether ETFs will be launching at the same time and begin trading on a level playing field.
Similar to their Bitcoin counterparts, the Purpose Ether ETF will charge a management fee of 1%. Evolve’s version will cost 0.75% and the CI Galaxy Ethereum ETF will charge 0.40%. But a price war has already started: To attract new investors, Evolve announced over the weekend it will be waiving the full management fee until May 31, making its Ether ETF essentially free. The management fee will revert to 0.75% after May 31, the company said, plus applicable sales taxes.
Ether rallied in the past year, along with Bitcoin, amid the cryptocurrency mania. It has plunged 8% since last Thursday following the public listing of cryptocurrency exchange
Write to Evie Liu at [email protected]