Bitwise liquidates six crypto option ETFs as SEC yields hit zero
In brief
- Bitwise liquidated six option-income ETFs (ICOI, IMRA, IMST, IGME, ICRC, IETH) on July 31.
- All six funds reported 0% 30-day SEC yield despite advertised payouts up to 25.93%.
- Shareholders holding shares August 3 receive automatic cash redemption around August 10.
- Combined pre-liquidation assets totaled approximately $23.1 million.
Option-Income Strategies Unwind
The liquidated funds—ICOI, IMRA, IMST, IGME, ICRC, and IETH—employed option-income strategies tied to Coinbase, Marathon Digital, Strategy, GameStop, Circle, and Ethereum. These products promised steady distributions by selling covered calls on underlying crypto assets. Bitwise's April 23 payout estimate put the rates between 11.15% for IETH and 25.93% for IMST, attracting retail investors seeking yield in a volatile market.
The collapse in payouts mirrors broader stress in structured crypto products. By June 25, Bitwise estimated all six payouts as 100% return of capital—meaning investors would get back their original investment but no additional income. The final net asset value calculation was scheduled for August 7, with proceeds expected to reach investors around August 10.
What the SEC Yield Means
The contrast between advertised distributions and the 0% SEC yield matters. The 30-day SEC yield measures annualized dividends and interest after expenses. Return of capital is Bitwise's estimate of the portion representing an investor's original investment. When the SEC yield hits zero, it signals the fund is returning principal rather than generating earnings—a red flag for income-focused investors.
The funds reported combined pre-liquidation assets under management of approximately $23.1 million as of late July. That modest AUM suggests limited damage from the liquidation, but it also underscores how quickly appetite for these products evaporated once yield disappeared.
The funds were set to stop accepting creation and redemption orders after the July 31 close, locking in the final net asset value. Shareholders who didn't sell before that deadline now face an automatic cash settlement, with no option to exit at a different price.
