Michael Sonnenshein at the 2022 Forbes Iconoclast Summit at the New York Historical Society on November 3, 2022.
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DAVOS, SWITZERLAND — Michael Sonnenshein, CEO of Grayscale Investments, told CNBC Most (it says all 11 in the title, summary and main point though) Certified Bitcoin exchange-traded funds will not survive, while defending the highest fees in the market for the company’s own product.
The Grayscale Bitcoin Trust ETF is the largest in the world, with more than $25 billion in assets under management.
When the U.S. Securities and Exchange Commission approved a slew of Bitcoin exchange-traded funds earlier this month, much focus was on the management fees that companies from BlackRock to Fidelity were charging.
Many ETF issuers were charging 0% fees for a limited period of time before raising them slightly. Most approved ETFs have fees between 0.2% and 0.4%.
But the Grayscale Bitcoin Trust ETF charges a 1.5% fee.
Sonnenshein explained several reasons for charging these fees, including the fact that it is the largest Bitcoin fund, has a 10-year track record of “operating successfully” and has a diverse investor base.
“Investors weigh heavily on things like liquidity, track record, and who is the actual issuer behind the product. Grayscale is a crypto specialist. It really paved the way for a lot of these products to emerge,” Sonnenshein told CNBC in an interview. At the World Economic Forum in Davos on Thursday.
Sonnenshein said the reason other ETFs have lower fees is that the products “don’t have a good track record” and issuers are trying to attract investors with fee incentives.
“I think from our perspective this may sometimes raise questions about their long-term commitment to the asset class,” Sonnenshein said.
Grayscale’s CEO said two to three spot Bitcoin ETFs “may get some sort of critical mass” of assets under management, but others may be pulled from the market.
“I don’t think the market will ultimately have these 11 spot products that we find ourselves having,” Sonnenshein said.