Grayscale CEO says fees on its bitcoin ETF will drop over time after outflows hit $12 billion
Michael Sonnenshein, CEO, Grayscale Investments at the NYSE, April 18, 2022.
Source: NYSE
LONDON — The boss of digital asset management firm Grayscale, which manages the $26 billion exchange-traded fund GBTC, has said that fees on its flagship product will come down over time, after its outflows reached $12 billion.
Grayscale CEO Michael Sonnenshein said that the crypto fund manager expects to bring fees on its Grayscale Bitcoin Trust ETF down in the coming months, as the nascent crypto ETF market matures.
“I’ll happily confirm that, over time, as this market matures, the fees on GBTC will come down,” Sonnenshein told CNBC in an interview on Monday. The firm previously defended its costlier-than-market-average charges.
“We have seen this in countless other exposures, countless other markets, you name it, where typically when products are earlier in their lifecycle, when they’re new to be introduced, these [fees] tend to be higher. And, as those markets mature, and as those funds grow, those fees tend to come down, and we expect the same to be true of GBTC.”
GBTC has logged outflows of more than $12 billion since it was converted into an ETF in early January, according to data from crypto investment firm CoinShares, due in no small part to its higher-than-average fees.
CoinShares’ data shows that GBTC recorded its biggest single daily outflow on Monday, with withdrawals totalling $643 million.
“Of course, we anticipated having outflows,” Sonnenshein told CNBC. “Investors have been wanting to either take gains on their portfolio, or arbitragers coming out of the fund, or people unwinding positions that were part of bankruptcies through forced liquidation.”
Market commentators argue that the bankruptcy of crypto giant FTX has played a significant role in the selloff of GBTC. FTX was a major holder of GBTC before it filed for insolvency in November 2022, holding about 22 million shares as of Oct. 25.
The FTX bankruptcy estate reportedly offloaded the majority of its shares in Grayscale’s bitcoin ETF, according to January reporting from Bloomberg and CoinDesk.
“None of that came as a surprise, right,” Sonnenshein said, speaking about the outflows. “What we’ve seen is GBTC continue to trade liquidly with tight spreads, and across a very diversified shareholder base. So we kind of think we’re between the first and the second inning of this.”
“We’re kind of at the end of that first inning now, where the pent-up demand for buying has hopefully been satisfied, the pent up demand for selling has also hopefully been satisfied,” Sonnenshein added.
“And now we’re kind of starting to move towards that second and third inning, where there’s so much more of the market that still is not yet accessing these products.”
The crypto fund manager charges a 1.5% management fee for GBTC holders, significantly higher than the charge commanded by many ETF providers, including BlackRock and Fidelity.
Vanguard has waived fees for investors entirely until March 2025 in a bid to lure in deposits.
Grayscale’s Sonnenshein defended the firm’s high fees at the time, telling CNBC they were justified by GBTC’s liquidity and track record. He said that the reason other ETFs have lower fees is that their products “don’t have a track record,” and the issuers are trying to lure investors with fee incentives.
Sonnenshein said the reason other ETFs have lower fees is that the products “don’t have a track record” and the issuers are trying to attract investors with fee incentives. “I think from our standpoint, it may at times call into question their long-term commitment to the asset class,” he said.
Sonnenshein told CNBC Monday that “all of these new issuers really came into the market to compete with us” and are also rivaling each other.
Grayscale also wants to introduce other ways of giving investors less costly ways of accessing its bitcoin ETF, including a “mini” version of its flagship product — the Grayscale Bitcoin Mini Trust, announced last week. The new ETF is set to trade under the ticker “BTC” and have a materially lower fee than GBTC.
The new BTC ETF would be effectively spun out of the Grayscale Bitcoin Trust ETF and seeded with an as-yet undisclosed portion of bitcoin underlying GBTC shares.
Under this structure, existing holders of GBTC would be able to benefit from a lower total blended fee while maintaining the same exposure to bitcoin, spanning ownership of shares of both GBTC and BTC.
Existing GBTC shareholders would also be able to convert into BTC without paying capital gains tax.
The firm is currently awaiting approval from the U.S. Securities and Exchange Commission for its Bitcoin Mini Trust ETF.
Moving forward, Sonnenshein wants investors to turn their attention toward the business’ other crypto investment products, which track prices of different cryptocurrencies including ether and solana.
The company is trying to have its Grayscale Ethereum Trust converted into an ETF, but is awaiting SEC approval.
The Datadog stand is being displayed on day one of the AWS Summit Seoul 2024 at the COEX Convention and Exhibition Center in Seoul, South Korea, on May 16, 2024.
Chris Jung | Nurphoto | Getty Images
Datadog shares were up 10% in extended trading on Wednesday after S&P Global said the monitoring software provider will replace Juniper Networks in the S&P 500 U.S. stock index.
S&P Global is making the change effective before the beginning of trading on July 9, according to a statement.
Computer server maker Hewlett Packard Enterprise, also a constituent of the index, said earlier on Wednesday that it had completed its acquisition of Juniper, which makes data center networking hardware. HPE disclosed in a filing that it paid $13.4 billion to Juniper shareholders.
Over the weekend, the two companies reached a settlement with the U.S. Justice Department, which had sued in opposition to the deal. As part of the settlement, HPE agreed to divest its global Instant On campus and branch business.
While tech already makes up an outsized portion of the S&P 500, the index has has been continuously lifting its exposure as the industry expands into more areas of society.
DoorDash was the latest tech company to join during the last rebalancing in March. Cloud software vendor Workday was added in December, and that was preceded earlier in 2024 with the additions of Palantir, Dell, CrowdStrike, GoDaddy and Super Micro Computer.
Stocks often rally when they’re added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.
New York-based Datadog went public in 2019. The company generated $24.6 million in net income on $761.6 million in revenue in the first quarter of 2025, according to a statement. Competitors include Cisco, which bought Splunk last year, as well as Elastic and cloud infrastructure providers such as Amazon and Microsoft.
Datadog has underperformed the broader tech sector so far this year. The stock was down 5.5% as of Wednesday’s close, while the Nasdaq was up 5.6%. Still, with a market cap of $46.6 billion, Datadog’s valuation is significantly higher than the median for that index.
— CNBC’s Ari Levy contributed to this report.
CNBC: Datadog CEO Olivier Pomel on the cloud computing outlook
A representation of cryptocurrency Ethereum is placed on a PC motherboard in this illustration taken on June 16, 2023.
Dado Ruvic | Reuters
Stocks tied to the price of ether, better known as ETH, were higher on Wednesday, reflecting renewed enthusiasm for the crypto asset amid a surge of interest in stablecoins and tokenization.
BitMine Immersion Technologies, a bitcoin miner that announced plans this week to make ETH its primary treasury reserve asset, jumped about 20%. It’s gained more than 1,000% since the announcement. Betting platform SharpLink Gaming, which has also initiated an ETH treasury strategy, added more than 11%. Bit Digital, which last week exited bitcoin mining to focus on its ETH treasury and staking plans, jumped more than 6%.
“We’re finally at the point where real use cases are emerging, and stablecoins have been the first version of that at scale but they’re going to open the door to a much bigger story around tokenizing other assets and using digital assets in new ways,” Devin Ryan, head of financial technology research at Citizens.
On Tuesday, as bitcoin ETFs snapped a 15-day streak of inflows, ether ETFs saw $40 million in inflows led by BlackRock’s iShares Ethereum Trust. ETH ETFs came back to life in June after much concern that they were becoming zombie funds.
The price of the coin itself was last higher by 5%, according to Coin Metrics, though it’s still down 24% this year.
Ethereum has been struggling with an identity crisis fueled by uncertainty about the network’s value proposition, weaker revenue since its last big technical upgrade and increasing competition from Solana. Market volatility, driven by geopolitical uncertainty this year, has not helped.
The Ethereum network’s smart contracts capability makes it a prominent platform for the tokenization of traditional assets, which includes U.S. dollar-pegged stablecoins. Fundstrat’s Tom Lee this week called Ethereum “the backbone and architecture” of stablecoins. Both Tether (USDT) and Circle‘s USD Coin (USDC) are issued on the network.
BlackRock’s tokenized money market fund (known as BUIDL, which stands for USD Institutional Digital Liquidity Fund) also launched on Ethereum last year before expanding to other blockchain networks.
Tokenization is the process of issuing digital representations on a blockchain network of publicly traded securities, real world assets or any other form of value. Holders of tokenized assets don’t have outright ownership of the assets themselves.
The latest wave of interest in ETH-related assets follows an announcement by Robinhood this week that it will enable trading of tokenized U.S. stocks and ETFs across Europe, after a groundswell of interest in stablecoins throughout June following Circle’s IPO and the Senate passage of its proposed stablecoin bill, the GENIUS Act.
Ether, which turns 10 years old at the end of July, is sitting about 75% off its all-time high.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike