“Grayscale IPO: Where crypto ETFs meet cheaper fees.”
Grayscale’s intention to go public under the ticker GRAY on the New York Stock Exchange raises a major, big question: Will that lead to a change in the dollar amount of money it will need to keep its $35 billion worth of ETFs and trusts held on to? At least not quickly, at least not immediately. It can be that the incentives of the public listing could drive Grayscale to lower fees on products such as GBTC and ETHE in due course as they are subject to pressure over time. ETF holders have nothing dynamic overnight, as is the S-1 filing mentioned in CryptoSlate’s summary in an S-1. Your assets are still with the same custodians, the trust design stays the same, and the IPO will not automatically be adjusted, so expense ratios do not automatically adjust. But the decision adds new layers of scrutiny, transparency and competition that could affect where prices could go next in terms of transparency and competition.
Grayscale has already been squeezed to reduce fees under huge competition from low priced issuers including BlackRock and Fidelity. And that competition has been brutal. GBTC saw over $21 billion in outflows in 2024 and another $3 billion in early 2025, fueled mainly by cheaper alternatives. The effects are clear from the S-1: Grayscale’s average management fee fell from 1.67% to 1.39%, and total revenue fell from just shy of $397.9 million to $318.7 million a year ago. The firm’s average AUM also declined from $31.8 billion to $30.6 billion. This means that competition is setting the stage for Grayscale to adapt even before the IPO; and that as a public company, increasing scrutiny will make that headwinds.
The IPO is a company listing for Grayscale, not an ETF listing. That company will own GRAY stock. Class A shares are publicly available, and Class B shares are owned by Digital Currency Group (DCG), which will grant the company roughly 70% voting control, maintaining Grayscale as a “controlled company” under NYSE regulations. That means DCG ultimately inform long-term decisions including the speed or lag in reducing fees. Still, going public brings new expectations. Shareholders want high margins and revenue, and ETFs want lower fees. Balancing those forces is a key challenge of management. One noteworthy part of the S-1 is the directed share program, whereby eligible holders of GBTC and ETHE can purchase GRAY IPO shares were they to register by November 24. It doesn’t directly lower ETF fees, but it aligns loyal fund holders slightly with the upside of the company. But owning both ETF shares and GRAY stock means that coming down to future fee cuts benefit either side, benefits you either way (and if it’s bad, you might harm one side’s margins) or both, but an understanding of both can contribute to better decision making. In simple terms, the IPO will not immediately raise your cost of holding Grayscale funds and, at least, not immediately reduce your price at $25m to hold GRAY funds.
Expense ratios will be maintained as they are before Grayscale officially decides to change them. But gradually, the public-company environment generally forces asset managers to compete better. Grayscale has already begun to take these steps forward, including with the introduction of Bitcoin Mini Trust ETF with a very low 0.15% fee, among the lower in the industry. It might keep selling similarly low-fee products or cutting fees on legacy ETFs to protect market share against such giants as BlackRock and Fidelity. There are also risks. Public, too, means higher regulatory, legal, and compliance costs. Public companies have rigorous quarterly reporting obligations, adding overhead. And, if costs escalate substantially, it could slow cutback on fees. Grayscale also gains increased legal and regulatory exposure as a well understood crypto firm. But none of these issues directly increase fees experienced by ETF holders; they just change the level to which Grayscale can compete on pricing.
Overall, here the IPO doesn’t rewrite the cost structure right now, but it augments a longer-term shift. Grayscale is launching onto a larger stage, where heavy fees are more difficult to justify, outflows attract more scrutiny and transparency becomes a core part of the brand. ETF holders should think about how Grayscale changes its pricing for the next year and compare that to the competition. If the firm continues to reduce fees its S-1 already indicates it’s doing so it could serve to entice investors who have already fled for cheaper alternatives. The IPO represents a new phase in crypto ETFs’ lives, and while it won’t necessarily make your holdings instantly cheaper, it amplifies the trend toward more aggressive costs across the industry.
