VanEck to liquidate Ethereum futures ETF, citing growing demand for spot alternative

Asset manager VanEck has announced the dissolution of its Ethereum futures exchange-traded fund (ETF) EFUT, citing the approval of a spot ETF for the same product as its key reason. According to a press statement, the company said the Board of Trustees for the ETF Trust approved the liquidation and dissolution of the Fund on September 5.

As part of the dissolution process, EFUT shares will cease trading on the CBOE exchange by September 16. This will also be the last day the fund accepts creation orders from authorized participants.

Liquidation due to investors’ shift to spot Ethereum ETFs

VanEck explained that it dissolved the Fund after analyzing several factors, including liquidity, performance, investors’ interest, and assets under management. Based on these factors and other operational issues, it saw no reason to continue with EFUT.

However, the firm’s post on X (formerly Twitter) highlighted that the crucial factor was the approval of the Ether ETF product. The post reads:

“Now that our spot ethereum ETP has been approved, we are closing our ETF that invested in ethereum futures.”

This is not surprising given how interest in Ethereum exchange-traded products (ETPs) has shifted to the spot since the US Securities and Exchange Commission (SEC) approved them in July. Spot ETFs are generally more attractive for investors as they provide direct exposure to the asset compared to future ETFs, which only track the price of futures contracts on the product, offering indirect exposure and attracting higher costs.

The attractiveness of Ether spot ETFs is evident for VanEck. Despite being around since October 2023, EFUT‘s total asset is only $21 million, while the more recent spot ETF ETHV has seen a net inflow of $63 million, according to Farside Investors data. By focusing only on its spot Ethereum ETF product, the firm will hope to compete better with the ETFs of more established firms like BlackRock and Grayscale.

Meanwhile, the move does not come as a total surprise to market observers. VanEck also liquidated its Bitcoin futures ETF XBTF in January after it got approval for the spot version. Its Bitcoin spot ETF HODL currently has an asset under management of $547 million.

VanEck EFUT Shareholders to receive cash distributions

VanEck has informed EFUT shareholders they can sell their shares until September 16, when the fund will be delisted. Any remaining shares after this date will be liquidated around September 23, with shareholders receiving cash distributions based on the net asset value of their shares.

The firm plans to send the liquidation proceeds directly into the brokerage accounts of such investors by September 23, making the whole process seamless. It also noted that shareholders may later receive another distribution of net income and capital gains earned by the Fund that was not distributed before the liquidations.

Meanwhile, EFUT’s share price has fallen 4.42% today after the news broke about its upcoming liquidation. It is now trading at $19.26 and has fallen 36.85% in the past six months, mirroring the decline of ETH, which lost 40% of its value in three months and now trades at $2,200.