On Friday, the asset management company and exchange-traded fund (ETF) provider VanEck announced its choice to wind down its Ethereum Futures ETF (EFUT). As stated in the official announcement, shareholders will have the chance to sell their shares on the fund’s listing exchange until the market closes on September 16, 2024.
After that date, the shares will no longer be available for trading on the exchange and will be officially delisted. Investors are advised that should they sell their shares before this date, they might incur transaction fees from their broker-dealers.
Implications of VanEck’s ETF Liquidation for Investors
According to the announcement, anyone holding shares on the liquidation date, anticipated to be around September 23, 2024, will receive a cash distribution equivalent to the net asset value of their shares.
This means that shareholders will be credited with a cash amount reflecting the value of their holdings at the time of liquidation, which will be added to the cash portion of their brokerage accounts.
Furthermore, shareholders may receive a final distribution of net income and capital gains earned by the Fund that were not distributed prior to the liquidation. This could offer investors an additional financial advantage as they conclude their investment in the ETF.
VanEck also indicated that the final tax status of all distributions made by the Fund, including the liquidating distribution, will be communicated to shareholders through year-end tax reporting. This will clarify any portions of the distribution that may be classified as a return of capital, which could influence the shareholder’s basis in their shares.
Earlier this year, the asset manager also shut down its Bitcoin futures ETF following the approval of its Bitcoin spot ETF in January.
However, the announcement did not address its recently launched spot Ethereum ETF (ETHV), which remains part of the asset manager’s offerings despite facing considerable outflows since it began trading in July.
Outflows in VanEck’s Spot Ethereum ETF
Both the Ethereum and Bitcoin spot ETF markets have experienced significant outflows over the last month, further influencing the ongoing price correction observed in the two largest cryptocurrencies in the market.
The Ethereum ETF market has seen outflows totaling around $562 million since its launch on August 19, largely driven by VanEck’s outflows of $47 million during the same timeframe, according to Farside data.
This has contributed to a nearly 7% decrease in ETH’s price, which is currently trading at $2,240. In the past fourteen days, ETH has dropped nearly 20%. Over the last month, it accounts for a 5.6% decline in the second largest cryptocurrency in the market.
Featured image from DALL-E, chart from TradingView.com
