Hashdex to Wind Down DEFI Spot Bitcoin ETF After Failing to Gain Scale

Hashdex will close its U.S.-listed spot Bitcoin ETF, DEFI, after the fund failed to attract sufficient assets and trading activity to remain viable, the firm told The Wall Street Journal. DEFI, which trades on NYSE Arca, will stop trading after the market closes on Aug. 17. Hashdex will then begin liquidating the ETF's Bitcoin holdings and delist the shares. Authorized participants will no longer be able to submit creation orders after Aug. 17. Investors may continue to buy and sell DEFI through brokers up to the final trading session. As the closure date approaches, bid/ask spreads may widen and the market price may drift further from net asset value (NAV). Hashdex expects to distribute liquidation proceeds in cash around Aug. 28. Shareholders who remain through the liquidation will receive cash rather than Bitcoin. The final payment will reflect Bitcoin's price during the unwind and will be reduced by liabilities and liquidation expenses. DEFI had about $14.7 million in assets under management as of July 30, placing it among the smaller U.S. spot Bitcoin ETFs. On July 31, the fund's NAV was $71.32 per share and the closing market price was $71.15. The ETF generally held at least 95% of assets in spot Bitcoin, with the balance in cash, cash equivalents and CME-listed Bitcoin futures. DEFI converted from a futures-based product and only started holding spot Bitcoin in March 2024, after the first wave of spot Bitcoin ETFs launched in January, leaving it at a disadvantage versus larger rivals in asset gathering and liquidity. DEFI charged a 0.25% expense ratio. For investors, the decision largely comes down to timing. Selling before Aug. 17 delivers the prevailing market price, which may differ from the eventual liquidation value. Holding through liquidation results in a cash payout expected around Aug. 28 that could be higher or lower than DEFI's pre-closure NAV, depending on Bitcoin's moves while positions are unwound. U.S. investors should also consider taxes: the cash distribution may be treated as a taxable disposition, with treatment varying by account type, cost basis and individual circumstances. Hashdex said the shutdown does not signal a broader exit from U.S. crypto ETFs. Its Hashdex Nasdaq CME Crypto Index ETF (NCIQ) remains in operation, with about $206.82 million in net assets as of July 31. NCIQ offers market-cap-weighted exposure to a basket of crypto assets; as of late July, Bitcoin accounted for roughly 78% of the portfolio and Ethereum about 12.2%. Hashdex reduced NCIQ's management fee from 0.50% to 0.25% in March and rebranded the fund in January without changing the ticker. DEFI's closure underscores how difficult it can be for smaller spot Bitcoin ETFs to compete for liquidity and inflows against larger incumbents. DEFI shareholders now face a choice: sell ahead of Aug. 17 to lock in market pricing, or hold through liquidation and accept a cash distribution—and potential tax implications—around Aug. 28.