VanEck Closes Ethereum Futures ETF
VanEck is closing its Ethereum Futures ETF, offering investors cash payouts as the crypto market faces major outflows and price declines.
On Friday, VanEck, a well-known asset management company and exchange-traded fund (ETF) issuer, announced its decision to liquidate its Ethereum Futures ETF (EFUT). This marks a significant move as the firm continues to navigate challenging market conditions.
According to the official release, shareholders have until September 16, 2024, to sell their shares on the listing exchange. After this date, the ETF will be delisted, meaning shares will no longer be tradable. Investors should be aware that selling before this deadline may result in transaction fees imposed by broker-dealers.
What Does VanEck’s Liquidation Mean for Investors?
For those who hold shares until the liquidation date, which is expected around September 23, 2024, they will receive a cash distribution equivalent to the net asset value (NAV) of their holdings. This payout will be credited directly to the cash portion of their brokerage accounts, ensuring they still get the value of their investment as the ETF winds down.
In addition to the NAV payout, shareholders may also receive a final distribution of any net income or capital gains that the Fund earned but had not yet distributed before liquidation. This final payment could provide an extra benefit to investors as they exit their positions.
VanEck has also advised that the final tax status of all distributions, including the liquidating payout, will be communicated to shareholders during the year-end tax reporting process. This report will clarify any part of the distribution that may be treated as a return of capital, which could impact the tax basis of the shareholders' holdings.
VanEck’s History of ETF Closures
Earlier this year, VanEck also made headlines when it closed its Bitcoin Futures ETF following the approval of its Bitcoin Spot ETF. This latest move to close the Ethereum Futures ETF has further raised eyebrows, particularly because VanEck’s Spot Ethereum ETF (ETHV) remains operational despite experiencing significant outflows since its launch.
Despite this liquidation, the company did not mention any future plans for the Spot Ethereum ETF, which continues to see outflows and struggles with market performance.
The Impact of Outflows on Ethereum and Bitcoin ETFs
The Ethereum and Bitcoin Spot ETF markets have experienced major outflows over the past month. These outflows have contributed to the ongoing price correction in the market, with both of the largest cryptocurrencies facing declines in their value.
Since its inception in August, the Ethereum ETF market has seen outflows totaling $562 million, with VanEck’s own funds accounting for $47 million of these withdrawals, according to Farside data. The company’s significant outflows have further exacerbated the price drop in Ethereum.
This continuous outflow of funds has contributed to a nearly 7% drop in Ethereum’s price in recent weeks. Over the last two weeks, Ethereum’s value has also fallen by around 20%, reflecting the downward trend in the broader crypto market.
The broader market downturn, led by the decline in Bitcoin, has had a direct effect on the Ethereum ETF market, further challenging investors and asset managers alike.
What’s Next for VanEck and the Crypto Market?
As VanEck continues to navigate these turbulent market conditions, the decision to close its Ethereum Futures ETF raises questions about the future of crypto ETFs in the current environment. While the company’s Bitcoin Spot ETF has remained active, the struggles in the Ethereum ETF market highlight the ongoing challenges that the crypto industry faces.
In the meantime, investors are left weighing their options, trying to balance their portfolios amid the continued volatility of the cryptocurrency market. VanEck’s decision to exit the Ethereum Futures space may be a signal of the broader struggles facing the industry, particularly as regulators and market forces continue to shape the future of digital assets.
For now, it remains to be seen how VanEck’s Spot Ethereum ETF will perform and whether the company will take further actions to address its ongoing outflows and market corrections.
