VanEck to Close Its Ethereum Strategy ETF, Following the Liquidation of Its Bitcoin Strategy ETF

VanEck, an asset management firm known for its exchange-traded fund (ETF) offerings, has announced that it will close and liquidate its Ethereum Strategy ETF.

VanEck, an asset management firm known for its exchange-traded fund (ETF) offerings, has announced that it will close and liquidate its Ethereum Strategy ETF.

According to a statement from VanEck on Friday, the decision was made following a review of several factors, including the fund’s performance, liquidity, assets under management, and investor interest. “The decision was made to liquidate the Fund based on an analysis of these factors and other operational considerations,” the company stated.

The Ethereum Strategy ETF will cease trading on its listing exchange after the market closes on Sept. 16, 2024. During this period, shareholders will still be able to sell their shares on the exchange, although broker-dealer transaction fees will apply. The shares will be delisted after the market closes on Sept. 16, 2024. Shareholders who hold onto their shares until the liquidation date, expected around Sept. 23, 2024, will receive a cash distribution in their brokerage accounts. The cash amount will be equivalent to the net asset value of their shares at the time of liquidation.

VanEck also noted that shareholders may receive a final distribution of net income and capital gains that the fund earned but did not distribute prior to its closure. The final tax status of these distributions, including any portion that may be treated as a return of capital, will be provided to shareholders with the fund’s year-end tax reporting.

Details of the VanEck Liquidation Process

The company stated that it will stop accepting creation orders from Authorized Participants on Sept. 16, 2024, which will mark the final point at which new shares can be created in the ETF. Shareholders will generally recognize a capital gain or loss for tax purposes, calculated as the amount received for their shares over their adjusted basis in such shares.

This move follows VanEck’s earlier decision to liquidate its Bitcoin Strategy ETF on Jan. 17, 2024. The Bitcoin Strategy ETF, which was listed on the Cboe BZX Exchange since Nov. 2021, was also closed after a review of its performance, liquidity, and investor interest. “VanEck continuously monitors and evaluates its ETF offerings across several factors,” the company said in its announcement regarding the Bitcoin ETF liquidation. Shareholders were permitted to sell their shares of the Bitcoin Strategy ETF until January 30, 2024, and the fund was delisted by Feb 6, 2024.

The VanEck Bitcoin Trust ETF, trading under the ticker HODL, began trading on the Cboe BZX Exchange on Jan. 11, 2024. Reports indicated that spot Bitcoin ETFs saw high trading volumes, with inflows to U.S. crypto products outpacing those of Canada, Germany, and Sweden for the week ending Jan 12, 2024.

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