Coinbase is Set to Win Over Big Investors by Launching Crypto Index Fund

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by Bhushan Akolkar · 3 min read
Coinbase is Set to Win Over Big Investors by Launching Crypto Index Fund
Photo: Jon Russel / Flickr

Coinbase Crypto Index Fund is currently available to the U.S-resident accredited investors, promising more funds in the pipeline for global ones.

Earlier this year in March 2018, Coinbase announced the launch of its new Crypto Index Fund specifically targeted towards big investors. The new Crypto Index Fund has been launched as a part of the new subsidiary called the Coinbase Asset Management lead by Reuben Bramanathan.

During the announcement, product lead Bramanathan said that the new index fund will give its investors exposure to all the assets that are listed on GDAX, which is Coinbase’s institutional exchange. When explaining the need for such fund’s creation he said:

“We’re seeing strong demand from our customers and the market generally for a passive investment management product.”

In the latest blog-post on Wednesday, June 13, Bramanathan stated that the Crypto Index Fund is now available for investments with a minimum required investment kept at $250,000. He wrote:

“We’ve seen overwhelming interest from investors since we announced the fund earlier this year. At this stage, we have opened the fund to those who wish to invest $250,000 to $20 [million].”

Investors of this fund will get an access to all the assets listed on the Coinbase’s GDAX exchange. Some of the digital assets available on this platform include bitcoin, bitcoin cash, ethereum, litecoin and now ethereum classic. The blog post notes that the assets will be weighed as per their market capitalization.

The company further added that the index level takes into account the ongoing increases in supply of each asset, not just changes in price, also noting that the index is reconstituted each time that a new asset is listed on GDAX.

However, the Crypto Index Fund is still not open to everyone. “At this stage, Coinbase Index Fund is only open to US-resident accredited investors,” Bramanathan stated. He also said that Coinbase is “working on launching more funds which are accessible to all investors and cover a broader range of digital assets.” However, he did not provide any additional timeline for this.

Index Fund will comprise of 62 percent Bitcoin, 27 percent Ethereum, 7 percent Bitcoin Cash and 4 percent Litecoin. The percentage distribution will get automatically rebalanced according to the market-cap weight, and upon addition of a new digital coin to GDAX.

Moreover, with the ongoing regulatory uncertainty in the U.S relating to digital currencies, Coinbase prefers to play defensive and remain cautious for the time being while including new digital assets. “There has been a lot of discomfort from the SEC around a lot of these ICO-based tokens. We’re not going to be the ones woperating in the black,” Coinbase President and COO Asiff Hirji said While previously commenting on this matter.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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