Charles Schwab's Calculated Approach to Bitcoin ETFs

Charles Schwab’s calculated approach to bitcoin ETFs

Posted by Lea Hogg Posted: Jan 30, 2024

Charles Schwab Corporation has been gradually warming up to the cryptocurrency space, signalling a potential strategic move into the competitive domain of Bitcoin spot exchange-traded funds (ETFs), according to industry analysts.

Patient player in the crypto game

While industry giants such as Fidelity and BlackRock engage in fierce competition for market dominance, Charles Schwab has adopted a measured approach, granting its customers access to all approved spot Bitcoin ETFs without hastily introducing proprietary offerings of its own. However, analysts foresee a possible shift in this conservative stance, anticipating Charles Schwab’s entry into the ETF race in the near future.

Eric Balchunas, a seasoned senior ETF analyst at Bloomberg, suggests that Schwab’s patient approach could position it to offer a product with lower fees compared to its competitors. This move, if realized, might have a transformative impact on the industry dynamics, especially among its large-scale customers.

Balchunas speculates that Charles Schwab might surprise the market by launching a product with significantly lower fees, potentially challenging the existing pricing structures of Bitcoin ETFs. He draws attention to the fee disparity between Grayscale’s ETF, with a substantial 150-basis-points fee, and Fidelity’s Bitcoin ETF, which boasts a modest 25-basis-points fee and is experiencing notable inflows.

Nate Geraci, president of the ETF Store, echoes this sentiment, expressing confidence in Charles Schwab’s eventual entry into the Bitcoin ETF market. Geraci envisions Schwab potentially disrupting the status quo by offering a product with transaction fees lower than those charged by current competitors.

Speculation on Schwab’s potential to reshape bitcoin ETF landscape

However, Ari Sonnenberg, a partner at Wagner Law Group, notes that Charles Schwab’s delayed entry aligns with its methodical approach to product development. Sonnenberg suggests that the company values a thoughtful line-up over a first-mover advantage, emphasizing its commitment to long-term success.

Despite initial skepticism toward the emerging cryptocurrency economy, Charles Schwab has demonstrated an increasing interest. Notably, unlike its competitor Vanguard, Schwab promptly added newly launched Bitcoin ETFs to its platform after approval, expanding user access beyond the Grayscale closed-end fund. The company’s support for the EDX Markets exchange and its offering of an ETF investing in crypto-related companies further highlight its adaptability to the evolving crypto landscape.