WisdomTree and Invesco Slash Fees on Bitcoin ETPs in Response to US ETF Trends
Two major US financial firms, WisdomTree and Invesco, have strategically adjusted the fees for their exchange-traded Bitcoin products (ETPs) in response to the introduction of cost-effective Bitcoin spot ETFs in the United States. This move is anticipated to stimulate increased competition in Europe, particularly in financial products reflecting Bitcoin prices, with hopes of capturing growing institutional demand for the leading cryptocurrency.
Invesco led the charge by announcing a significant reduction in the total expense ratio of the “Invesco Physical Bitcoin ETP,” dropping from 0.99 percent to 0.39 percent. Following suit, WisdomTree swiftly followed with a reduction in the annual fees of the “WisdomTree Physical Bitcoin ETP” from 0.95 percent to 0.35 percent.
The stage is now set for heightened competition among European providers offering products tied to BTC prices. The providers are optimistic about capitalizing on the increasing institutional interest in Bitcoin. Last year, Crypto ETPs attracted €2.1 billion in inflows, with BTC commanding an impressive 87 percent share. The positive sentiment surrounding the potential approval of Bitcoin ETFs in the USA, as early as the end of 2023, contributed to this surge.
It’s important to note that these products are not classified as ETFs in the USA due to differing legal frameworks. In Europe, the UCITS guidelines prevent the existence of Bitcoin ETFs, as they require a basic level of diversification. Unlike ETFs, ETPs are not specialized funds and lack theoretical protection against provider insolvency. However, the practical impact is diminished as many Bitcoin ETPs involve a physical deposit of BTC, with providers purchasing and securely storing the coins on behalf of investors.
For German private investors, prominent neo-brokers such as Scalable Capital, Justtrade, or Finanz.net Zero currently offer these ETPs. Nonetheless, it’s essential to note that purchasing Bitcoin directly remains the safest approach, adhering to the principle: “Not your keys, not your coins!”