Coinbase, the cryptocurrency exchange, is wading into the fund market, announcing the launch of the Coinbase Index Fund, the first-ever fund that gives investors access to all of the digital coins on the exchange.
In a blog post, Reuben Bramanathan, Product Manager at the company, said the new fund gives accredited investors or those individuals with $100,000 or more in income or more than $1 million in assets, exposure to all of the digital tokens listed on GDAX, Coinbase’s exchange. Bramanathan said the digital coins are weighted by market capitalization. If new assets are listed on the exchange, they will automatically be included in the Coinbase Index Fund. Bitcoin, Bitcoin Cash, Ether and Litecoin are the digital coins that are currently offered on the exchange and the ones that will be tracked with this new index fund. (See more: Coinbase Hit with 2 Class Action Lawsuits: Accused of Insider Bitcoin Cash Trading.)
“Index funds have changed the way that many people think about investing. By providing diversified exposure to a broad range of assets, index funds enable investors to track the performance of an entire asset class, rather than having to select individual assets. We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole,” wrote Bramanathan in the post. Bramanathan said Coinbase plans to launch more funds that will be available to different investors and not just accredited ones. (See more: IRS Wants to Tax Your Bitcoin Gains: Orders Coinbase to Hand Over User Data.)
In an interview with Bloomberg, Bramanathan said customers will be allowed to invest once each month and withdraw money once per quarter. Investors won’t be able to trade shares. The passively managed fund won’t be listed on an exchange, and in order to get access to it investors have to put up a minimum of $10,000 either via U.S. dollars or one of the cryptocurrencies Coinbase offers, reported Bloomberg.
Coinbase Asset Management, a new unit, will be in charge of the fund and other ones launched in the next few months. Bloomberg noted the next funds will be geared to retail investors, requiring the company to file with the Securities and Exchange Commission. “We are noticing people coming to the space for the first time, being excited about cryptocurrencies, but not knowing where to start, so we’re excited to give people the ability to get broad exposure to the entire asset class rather than having to select individual investments,” Bramanathan told Bloomberg. “We’re seeing strong demand from institutional and high-net-worth individuals.”