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Coinbase Launches its Crypto Index Fund for Institutional Investors

Coinbase Launches its Crypto Index Fund for Institutional Investors

The vast majority of crypto investors buy and sell digital currencies, using their own accounts and wallets. This represents a major difference from traditional equity and bond investors, who usually prefer passive trading through index funds, run by an asset manager. Coinbase now offers crypto investors to put their trust and cash into the newly launched fund.

In a yet another exciting announcement, the biggest American crypto exchange has opened the doors of its own index fund, which was originally announced over 3 months ago. The company reported it has seen “overwhelming” interest from investors since the announcement and now they finally have an opportunity to employ their money, although the entry is quite limited.

As of right now, only US accredited investors (either individuals or legal entities) can invest in the Coinbase Index Fund. Being an accredited investor means a net worth of over one million dollars, along with having an annual income of over $200,000. Perhaps due to a huge response from potential investors, Coinbase decided to set the minimum investment at $250,000 while the ceiling is set at $20 million.

The fund will be comprised of all virtual currencies, currently listed on the exchange – bitcoin, ethereum, bitcoin cash, and litecoin. We have recently reported that ethereum classic (ETC) will be added to Coinbase in the coming months, which means the fund will be rebalanced after the addition of ETC.

Currently, the cryptocurrencies that compose Coinbase Index Fund weigh as follows:

Bitcoin: 61.5%

Ethereum: 27.2%

Bitcoin Cash: 8.2%

Litecoin 3.1%

The fund has a quarterly redemption window and will charge a 2% annual management fee, while no performance related fees will be involved, which are usually a feature on most other crypto hedge funds.

The company also claimed that “Index funds have changed the way that many people think about investing, providing diversified exposure to a broad range of assets in one tool. We’re looking forward to giving clients the ability to invest in the potential of blockchain-based digital assets.“

The Coinbase Index Fund should receive significant interest from American institutional investors, as the exchange is closely cooperating with regulators and is also targeting institutions with their new Coinbase Pro platform, aimed at professional investors. The San Francisco-based exchange is also seen as one of the more secure places to keep your assets, as not a single hack has been reported since its launch 6 years ago.

Image Source: “Flickr”


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