Hashdex plans to liquidate its Hashdex Bitcoin ETF, trading under the ticker DEFI on NYSE Arca, in the first announced closure of a U.S. spot Bitcoin exchange-traded fund. The decision ends a brief 17-month run as a spot product for a fund whose assets remained far below those of its largest competitors despite Bitcoin’s strong performance over the period.
According to Hashdex’s Aug. 3 announcement, DEFI shares will stop trading after Aug. 17. Authorized participants will no longer be able to create new shares, and NYSE Arca will delist the fund following the final trading session. Shareholders remaining in the ETF after trading ends are expected to receive a cash liquidation distribution around Aug. 28.
The fund held roughly 225.58 Bitcoin and managed about $14.70 million as of July 30, according to Hashdex. Its asset base had reached a historical high of about $17.54 million, leaving it a fraction of the size needed to compete in a U.S. spot Bitcoin ETF market dominated by a small group of multi-billion-dollar products.
A small fund in a concentrated market
DEFI’s closure illustrates how quickly the U.S. spot Bitcoin ETF market has concentrated around a few established issuers. As of Aug. 4, the 13 U.S. spot Bitcoin ETFs collectively held about 1.212 million Bitcoin, representing roughly 5.77% of Bitcoin’s total supply, with combined assets of about $77.7 billion, according to issuer-reported fund holdings and asset values.
BlackRock’s iShares Bitcoin Trust, IBIT, accounted for more than $47 billion of that total and held roughly 737,000 Bitcoin. Fidelity’s Wise Origin Bitcoin Fund, FBTC, held about 171,000 Bitcoin with assets near $11 billion. Grayscale’s flagship Bitcoin Trust, GBTC, held approximately 133,000 Bitcoin and managed about $8.5 billion, while its lower-fee Bitcoin Mini Trust held around $3.78 billion.
The leading five spot funds accounted for about $72.85 billion of total assets, leaving smaller issuers to compete for a limited remainder of the market. Several funds have nevertheless reached meaningful scale: Bitwise’s BITB, ARK 21Shares’ ARKB and VanEck’s HODL each held between roughly $1 billion and $2.4 billion in assets.
DEFI, by contrast, stood near $14.46 million as of Aug. 4. The next-smallest products were substantially larger, with WisdomTree’s BTCW reported at about $143 million and several other spot funds managing between approximately $340 million and $399 million.
Fee income did not support the product
Hashdex set DEFI’s sponsor fee at 0.25% when it converted the fund to a spot Bitcoin ETF in March 2024. At $14.70 million in assets, that fee would produce roughly $36,700 in annualized gross management-fee revenue. Even at the fund’s $17.54 million asset peak, annualized revenue would have remained below $44,000.
Operating a U.S.-listed spot Bitcoin ETF requires ongoing spending on custody, administration, exchange listing, legal and compliance work, audits, insurance and market-making arrangements. Estimates included in the materials place the annual cost of maintaining such a fund between $500,000 and $1 million.
That cost structure leaves little room for a small spot ETF to operate independently. Bitcoin’s rising price can lift a fund’s net asset value, but price appreciation alone does not solve a scale problem when assets remain below levels that can cover the fixed expenses of maintaining a listed product.
The fund delivered cumulative returns of about 166% from launch, according to the supplied performance data. Its liquidation therefore does not appear tied to a poor Bitcoin-market outcome. The pressure came from distribution, liquidity and asset gathering in a category where larger funds can spread similar operating costs over tens of billions of dollars in assets.
Defi’s route from futures to spot bitcoin
DEFI began trading in September 2022 as a Bitcoin futures ETF. It was registered under the Securities Act of 1933, with Teucrium Trading and Victory Capital involved in its rollout.
After the U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETF applications in January 2024, Hashdex moved the product from futures-based exposure to direct spot Bitcoin exposure. The conversion took effect in March 2024, alongside the adoption of the Hashdex Bitcoin ETF name and the 0.25% sponsor fee.
The closure differs from earlier shutdowns involving Bitcoin-linked U.S. ETFs. VanEck liquidated its Bitcoin Strategy ETF, XBTF, in January 2024 with roughly $50 million in assets. Valkyrie liquidated its Balance Sheet Opportunities ETF, VBB, in October 2022 with about $570,000. Neither was a U.S. spot Bitcoin ETF holding Bitcoin directly.
For DEFI shareholders, the timeline creates a choice between selling before the final trading day or awaiting the cash distribution. The value received in the liquidation will depend on the fund’s net asset value and Bitcoin’s price as the portfolio is wound down. A sale before delisting may also occur at a premium or discount to net asset value, particularly if trading liquidity declines as the fund approaches closure.
A mandatory cash distribution can also create taxable consequences for U.S. holders, depending on each shareholder’s cost basis and tax status. Tax treatment varies by circumstance, making it different from simply continuing to hold Bitcoin exposure through an ETF.
Hashdex keeps expanding beyond defi
The ETF closure does not mark a retreat from digital-asset products by Hashdex. The Rio de Janeiro-based manager, founded in 2018 by Marcelo Sampaio and Bruno Caratori, has expanded its crypto index business across Brazil, Europe and the United States.
Hashdex worked with Nasdaq in 2020 on the Nasdaq CME Crypto Index and launched the HASH11 crypto ETF in Brazil in 2021. The company introduced its U.S. multi-asset crypto ETF, NCIQ, in February 2025.
As of July 28, Hashdex’s crypto index products managed more than $888 million across eight countries, according to the company. On July 24, Hashdex filed with the SEC to state that NCIQ had been permitted to stake crypto assets held by the fund, initially using Coinbase Cloud as its staking provider.
Under the arrangement described in the filing, net staking income up to an annualized 25 basis points of NCIQ’s net asset value would go to the sponsor. Income above that threshold would be divided 40% to the sponsor and 60% to fund shareholders. That structure applies to NCIQ and does not affect DEFI’s liquidation.
DEFI’s shutdown places a practical limit on the idea that every spot Bitcoin ETF can survive merely by offering direct Bitcoin exposure and a competitive fee. In a market led by products with billions of dollars in assets and deeply established trading activity, a fund with less than $15 million faced a cost burden that a 0.25% fee could not realistically absorb.
Explore how crypto funds work and compare structures by reading what are ETFs and how they work next.
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