Hashdex will close $14.7 million Bitcoin ETF DEFI

Hashdex to close and liquidate its US-listed Bitcoin ETF (DEFI)

The fund decided to terminate operations due to difficulties attracting sufficient assets and trading activity to sustain operations.

Summary

As of July 30, DEFI held approximately $14.7 million in assets. The fund's last trading day is Aug. 17, after which it will delist from NYSE Arca. Remaining shareholders are expected to receive cash settlement payments around Aug. 28. Another $206.8 million NCIQ Crypto Index ETF owned by Hashdex remains active.

DEFI will stop trading on August 17

Asset manager Hashdex announced that the Hashdex Bitcoin ETF (trading symbol: DEFI) listed on NYSE Arca will stop trading after the market close on August 17. The company will then begin to liquidate the fund's assets and delist its shares. The fund will also stop accepting creation orders from authorized participants from that date. Investors can continue to buy and sell stocks through brokers until the last trading day, but as the fund's closure approaches, the market price may differ from the fund's net asset value.

Hashdex attributed the closure to multiple factors, including the fund's asset size, trading liquidity, operating expenses and investor demand. As of July 30, assets under management by DEFI were approximately US$14.7 million, which was among the smaller types of spot bitcoin products in the United States. The fund's website showed that as of July 31, its net asset value per share was $71.32, and its closing price was $71.15. DEFI typically invests at least 95% of its assets in spot bitcoin, with the rest in cash, cash equivalents and CME-listed bitcoin futures.

Shareholders will receive cash after liquidation

Investors who still hold DEFI shares after the last trading day will not receive Bitcoin. The fund will sell the assets it holds and distribute the residual income in cash after deducting liabilities and liquidation expenses. Hashdex is expected to be distributed around August 28. The amount that shareholders ultimately receive depends in part on the Bitcoin price during the portfolio liquidation period, so the final amount paid may differ from the DEFI net asset value before the transaction closes.

The liquidation may have tax implications for U.S. investors. Cash distributions may be treated as taxable disposals, depending on the shareholder's cost base, account type and personal circumstances. Investors who sell shares before August 17 will receive the current market price rather than the final liquidation value. As funds approach delisting, trading volume and bid-ask spreads will become even more important.

Hashdex faces fierce competition from large bitcoin ETFs

DEFI entered the U.S. spot bitcoin ETF market by converting existing futures products. The fund began holding spot bitcoin in March 2024, more than two months after the U.S. Securities and Exchange Commission approved the first batch of spot bitcoin ETFs in January. The timing puts DEFI behind major competitors that have accumulated large amounts of assets and trading volume. Its relatively small asset size puts it at a disadvantage in the liquidity competition, although its expense ratio is only 0.25%.

This closure does not mean that Hashdex has withdrawn from the U.S. crypto ETF market. Its other fund, the Hashdex Nasdaq CME Crypto Index ETF (trading symbol: NCIQ), held approximately $206.82 million in net assets as of July 31. NCIQ currently allocates Bitcoin, Ethereum, Ripple, Solana, Cardano, Chain Link, Stellar and Bitcoin Cash on a market-weighted basis. As of July 27, Bitcoin accounted for 78% of its portfolio and Ethereum accounted for 12.2%. Hashdex also reduced NCIQ's annual management fee from 0.50% to 0.25%. The fund changed its name from the Hashdex Nasdaq Crypto Index U.S. ETF in January, but retained its original trading symbol.

DEFI investors face three key dates

DEFI shareholders currently face a shorter liquidation schedule. August 17 is the last day to sell stocks on NYSE Arca and the deadline for creating orders. Hashdex will then close its portfolio and expect a cash payment around August 28. Changes in the price of Bitcoin during this period will affect the remaining assets of the fund, which in turn will affect the final allocation. Investors who retain shares through liquidation should note that once the cash payment is completed, their positions will disappear from the brokerage account.

This closure only applies to DEFI and does not affect NCIQ or other crypto investment products of Hashdex.