Betashares’ debut of its bitcoin and Ethereum exchange-traded funds (ETF) on the ASX last week was accompanied by a management fee cut from VanEck’s own bitcoin ETF – mirroring the tactics fund managers used last year in this highly competitive space.
But while the fee reduction is an old tactic employed by fund managers, VanEck went a step further by alleging on X that Betashares’ bitcoin fund, in particular, carries “counterparty risks”.
Responding to a comment inquiring into whether VanEck’s fee reduction was a reaction to Betashares’ QBTC, as well as the fact that the fees for the two ETFs are now equal, VanEck said: “The fee may indeed be the same but one fund has counterparty risks, while the other is the largest bitcoin ETF in the country, backed up by a global fund manager with unparalleled expertise managing digital assets since 2017.”
In a comment provided to InvestorDaily on Tuesday, a spokesperson for Betashares assured that its exposures to bitcoin and Ethereum are not only robust but benefit from its partnership with a range of “world class and globally trusted” service providers.
“In terms of ensuring the safety of investor capital, the digital assets contained in QBTC and QETH are held in cold storage by Coinbase – the largest and only publicly listed digital asset custody provider in the world – making it subject to more stringent rules and regulations,” the spokesperson said.
According to the firm, Coinbase also “has more scale and assets under management compared to other provider[s], particularly in the institutional investor segment”.
Betashares, which launched both ETFs with US cryptocurrency index fund manager Bitwise, noted that this strategic partnership also offers significant benefits to local investors.
“Bitwise is a well-credentialled digital assets specialist, offering best-in-class investment solutions for a range of exposures across cryptocurrencies and crypto equities,” the spokesperson said. “The partnership between Betashares and Bitwise allows investors to tap into Bitwise’s global scale in digital assets which far exceeds any local fund manager.”
The spokesperson concluded: “Betashares is constantly seeking out ways to improve the quality of investment exposures available to Australian investors and we’re taking the exact same approach to digital assets.”
VanEck’s deputy head of investments and capital markets, Jamie Hannah, told InvestorDaily: “Gaining exposure to bitcoin via an ETF has many benefits for investors, including institutional-grade protection of the bitcoin and the additional safeguards that come with investing via a regulated vehicle.”
According to Hannah, VanEck employs a dual-custody model, leveraging two independent custodians to hold its bitcoin and thereby “enhancing risk management protocols”.
“When evaluating products, prudent investors should carefully assess the quality, scale and experience of the product issuer and their key service providers,” he said.
“We have already seen a number of crypto ETFs close in Australia, underscoring the importance of choosing an issuer with deep expertise and a strong track record in both traditional funds management and digital asset investments, on a global scale.”
VanEck’s VBTC was the first bitcoin ETF on the ASX, followed by Digital X’s offering. But last week, Betashares launched two new ETFs – the Betashares Bitcoin ETF (QBTC) and the first Ethereum ETF on the ASX, the Betashares Ethereum ETF (QETH), though Monochrome had already listed an Ethereum ETF on Cboe mid last year.
Back in July, VanEck similarly lowered its fees when the DigitalX Bitcoin ETF debuted on the ASX.
While it’s no secret that VanEck’s fee cuts often coincide with rival fund launches, this move isn’t just a VanEck trademark – Global X also dropped fees for its spot bitcoin ETF the same day VBTC debuted.
InvestorDaily previously covered the competition for Australia’s first bitcoin ETF, with each fund manager asserting their claim to the title for one reason or another.
Global X was first to enter the market back in 2022, when it listed both a bitcoin ETF and an Ethereum ETF on Cboe. Monochrome was next, listing a bitcoin ETF (IBTC) on Cboe in June, a few weeks before VanEck announced it was listing its product VBTC on the ASX.
DigitalX might’ve joined the party a little late, but that didn’t stop it from claiming the title of the “only ASX-listed locally domiciled ETF offering direct exposure to bitcoin”.
Australia now has five bitcoin ETFs, with slightly differing structures (often a point of contention), and three Ethereum ETFs.
