Charles Schwab Could Launch a Low-Fee Bitcoin ETF Soon, Says Bloomberg Analyst

Charles Schwab, one of the largest asset managers in the world, may be preparing to enter the Bitcoin ETF market with a competitive product that could undercut its rivals, according to a Bloomberg analyst.

Bitcoin ETFs are exchange-traded funds that track the price of Bitcoin, allowing investors to gain exposure to the cryptocurrency without having to buy, store, or secure it themselves. Bitcoin ETFs are seen as a more convenient and regulated way to invest in Bitcoin, especially for institutional and retail investors who may not be comfortable with the technical aspects of crypto.

Charles Schwab Could Launch a Low Fee Bitcoin ETF Soon Says Bloomberg Analyst

The first Bitcoin ETF in the US was launched by ProShares in October 2023, followed by several others from different issuers, such as Valkyrie, VanEck, and Bitwise. These ETFs have attracted billions of dollars in assets under management, demonstrating the strong demand for Bitcoin exposure among investors.

However, these ETFs are not without drawbacks. They charge relatively high fees, ranging from 0.95% to 1.5% per year, which can erode the returns of investors over time. They also face competition from other products, such as Grayscale Bitcoin Trust (GBTC), which charges a lower fee of 0.75% but trades at a discount to its net asset value (NAV).

Charles Schwab’s Potential Entry

According to Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, Charles Schwab may be planning to launch its own Bitcoin ETF soon, with a lower fee than its competitors. Balchunas tweeted on January 29, 2024, that he expects Schwab to roll out a Bitcoin ETF with a fee of 0.5% or less, which would make it the cheapest Bitcoin ETF in the US.

Balchunas based his prediction on Schwab’s recent moves in the crypto space, such as launching its first crypto-related ETF, the Schwab Crypto Thematic ETF (STCE), in August 2023, and filing for a crypto economy ETF in March 2023. He also noted that Schwab has a history of undercutting its rivals in the ETF industry, such as offering commission-free trading and slashing fees on its own ETFs.

Balchunas said that Schwab could leverage its scale and distribution network to attract investors to its Bitcoin ETF, and potentially claim the second spot in the market, behind ProShares. He added that Schwab could also benefit from the expected approval of a Bitcoin futures ETF by the Securities and Exchange Commission (SEC) in February 2024, which would allow it to offer a more efficient and liquid product than the current spot Bitcoin ETFs.

The Impact of Schwab’s Bitcoin ETF

If Schwab does launch a low-fee Bitcoin ETF, it could have a significant impact on the crypto market and the ETF industry. It could increase the adoption and awareness of Bitcoin among a wider range of investors, especially Schwab’s 33 million clients, who currently have limited options to access crypto through Schwab’s platform.

It could also put pressure on other Bitcoin ETF issuers to lower their fees or improve their products, which could benefit investors and the overall market efficiency. It could also spark more innovation and competition in the crypto ETF space, as more issuers and products enter the market.

However, Schwab’s Bitcoin ETF is not a certainty yet. It is still subject to the approval of the SEC, which has been cautious and selective in approving crypto ETFs. It is also possible that Schwab may face technical or operational challenges in launching and managing a Bitcoin ETF, which could delay or derail its plans.

Therefore, investors should take this rumor with a grain of salt, and wait for an official announcement from Schwab before making any decisions. However, given Schwab’s reputation and resources, it is not unreasonable to expect that it will enter the Bitcoin ETF market soon, and potentially shake up the industry.

Leave a Reply

Your email address will not be published. Required fields are marked *