CoinShares shares ETH staking yield with ETP clients

CoinShares is passing a portion of the staking rewards gained from its Ethereum exchange-traded product along to clients as part of a broader bid to bring more investors to the sector.

Investors of the Europe-listed CoinShares Physical Ethereum ETP will earn a 1.25% staking reward per year, the crypto-focused firm said Thursday.

Such a reward is shared via an “upward adjustment to the coin entitlement” — the amount of underlying assets required to create and redeem the security, according to CoinShares product head Townsend Lansing.

“Traditionally, the coin entitlement declines daily due to the management fee,” Lansing told Blockworks. “However, with our staking products, the management fee is reduced to 0%. The coin entitlement adjusts upward daily by the relevant staking reward, and the corresponding amount of coin is deposited into the issuer’s account.”

Newsletter

Subscribe to The Breakdown

CoinShares has made such moves before.

In January 2022, the firm slashed the fees of its Tezos and Polkadot ETPs to zero, and set the annual staking rewards level for the products at 3% and 5% respectively.

The company erased the management fee on the CoinShares Physical Ethereum ETP in February 2023 — ahead of the Shanghai hard fork — before now adding staking rewards a year later.

The reward calculation made by CoinShares’ staking agent took into account the zero management fee as well as “the relevant complexities of staking, including how much can be staked at any one time,” Lansing noted.

“We believe the fact that we don’t charge a management fee, which can be as high as 2.5% in other cases, [we] do disclose the full amount of the reward and maintain a stable level despite the fact that staking rewards can fluctuate represents good value for investors looking to participate in staking via ETPs,” he added.

CoinShares last month exercised its option to buy the fund arm of US bitcoin ETF issuer Valkyrie Investments — a firm entrenched in the segment’s fee war amid a fight for assets.

CoinShares more recently said it would lower the fee on its Physical Bitcoin ETP from 0.98% to 0.35% in a change that went into effect Thursday. Other firms, like WisdomTree and Invesco, made similar cuts days prior.

Frank Spiteri, the firm’s head of asset management, said competitive fee levels in the US played a part in CoinShares’ “global strategy toward pricing.”

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
0xResearch: Alpha in your inbox. Think like an analyst.