Spot Bitcoin ETFs Have Almost $100M in AUM in Brazil, Led by Hashdex Offering

As investors continue to await approval of a spot bitcoin exchange-traded fund (ETF) in the U.S., a check of Brazil finds hefty demand for such vehicles which have been trading in that country for more than two years.

Together, those ETFs have $96.8 million of assets under management (AUM) as of November 21, led by Hashdex's Nasdaq Bitcoin Reference Price FDI (BITH11) with $57.8 million in AUM as of November 21, or a market share of about 60%. As comparison, the largest ETF in the nation, iShares Ibovespa Index (BOVA11), has $2.41 billion in AUM and the second largest, the iShares BM&FBOVESPA Small Cap (SMAL11), has $1.19 billion in AUM. For reference, the largest U.S. ETF, the SPDR S&P 500, has roughly $430 billion in AUM.

According to Marcelo Sampaio, CEO and founder of Hashdex, the success of bitcoin ETFs in Brazil is the result of pro-market digital assets regulation and growing interest from large institutions for said products.

“There is a growing positive sentiment across the most sophisticated investors and we’ve been seeing increasing interest from some of the largest institutions whether that be either allocating or considering adding crypto soon to their portfolios,” said Sampaio in an interview with CoinDesk. Hashdex’s spot bitcoin ETF started trading on August 1, 2021.

Hashdex also offers a crypto index ETF that includes BTC, ETH and other cryptos and which garners a lot more investment than the spot bitcoin ETF, said Sampaio. Combined, Hashdex’s crypto-related ETF AUM is currently around $500 million.

Hashdex is also among those with outstanding applications for spot bitcoin ETFs with the U.S. Securities and Exchange Commission (SEC). The agency – as it's done with other applicants of late – last week delayed any decision on the Hashdex filing.

Other spot bitcoin ETF providers in Brazil include Itau ́ Asset Management, which teamed up with Mike Novogratz's Galaxy Digital to launch a fund last year, and an offering from QR Capital, which launched in 2021, has $36 million in AUM, according to data from Hashdex.

There has traditionally been a lot of interest in crypto ETFs from the Brazilian public, said Gui Silva, a managing partner at Tagus Capital, and the number of investors in digital asset ETFs will only continue to grow.

“There are about 4 million investors with accounts at the B3 stock exchange in Brazil and around 700,000 of these invest in ETFs," he said. "About one-third of those investors allocated funds to crypto ETFs last year."

A reason for the strong appetite in ETF investing in Brazil might be due to the low fees, according to Silva. “ETF fees in Brazil range from 0.5% to 1.5% - which is considered relatively low compared to other products in the market,” he added.