DAVOS, Switzerland — Grayscale Investments CEO Michael Sonnenshein told CNBC that most of the approved bitcoin exchange-traded funds won’t survive, while defending the highest fees in the market for the company’s own product.

The Grayscale Bitcoin Trust ETF is the world’s largest, with over $25 billion in assets under management.

When the U.S. Securities and Exchange Commission approved a swathe of spot bitcoin ETFs earlier this month, much focus was on the management fees that firms from BlackRock to Fidelity were charging.

Many of the ETF issuers were charging 0% fees for a limited amount of time before raising them slightly. Most of the approved ETFs have fees of between 0.2% and 0.4%.

But the Grayscale Bitcoin Trust ETF charges a 1.5% fee.

Sonnenshein laid out several reasons why it is charging that fee, including the fact it is the largest bitcoin fund, has a 10-year track record of “operating successfully” and has a diversified investor base.

“Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product. Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through,” 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 track record” and the issuers are trying to attract investors with fee incentives.

“I think from our standpoint, it may at times call into question their long-term commitment to the asset class,” Sonnenshein said.

The Grayscale CEO said two to three of the spot Bitcoin ETFs “will maybe obtain some kind of critical mass” of assets under management, but that the others may be pulled from the market.

“I don’t ultimately think that the marketplace will have ultimately these 11 spot products we find ourselves having,” Sonnenshein said.

Executives from the blockchain and cryptocurrency industry told CNBC that the recent crash in the digital coin market should help get rid of “bad actors” in the space.

Billions of dollars of value has been wiped off the cryptocurrency market in the last few weeks driven by a sell-off in stocks and the collapse of algorithmic stablecoin terraUSD and its related token luna.

“We’re in a bear market. And I think that’s good. It’s good, because it’s going to clear the people who were there for the bad reasons,” Bertrand Perez, CEO of the Web3 Foundation, told CNBC at the World Economic Forum in Davos, Switzerland.

“It’s good also, because all those projects are gone. So the legit ones will be able to focus only on developing on building and forget about the valuation of the token because everyone is down.”

“During the … bull markets when everything is green, no one thinks about building, everyone thinks about making a fortune, which is … the wrong mindset,” he added.

Mihailo Bjelic, co-founder of blockchain company Polygon, echoed the sentiment, calling the cryptocurrency sell-off “necessary.”

“[The] market, in my personal opinion, became maybe a little bit irrational, or maybe a little reckless to a certain extent. And when the times like that come, [a] correction is normally needed, and at the end of the day [is] healthy,” Bjelic said.

The sell-off in major digital currencies such as bitcoin and ether was sparked by a broader slump in stock markets, in particular the technology sector. The drop was worsened by the terraUSD stablecoin losing its $1 peg.

Large, institutional investors have been getting involved in the cryptocurrency market, and were also a key driver of the latest sell-off, according to Brett Harrison, president of cryptocurrency exchange FTX U.S.

He said that there has been a broader drop for risk assets, such as stocks, but that it’s affecting digital coins more than it has in the past because there is more institutional money in the space.

“If people are looking for assets to sell, crypto is going to be on the list,” Harrison told CNBC.

Brad Garlinghouse, CEO of Ripple, urged investors to take a longer term view.

“Bitcoin about two years ago right now, bitcoin was about $8,000. Now it’s at 30,000. So yes, there’s been a crash and a trillion dollars came off. But when you zoom out a little bit further and look at the long term trends, I think you see that crypto is here to stay,” Garlinghouse told CNBC.

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