Coinbase's President & COO Asiff Hirji announced during an interview on CNBC’s "Fast Money" on Tuesday that the Coinbase platform would soon leap into asset management with its own cryptocurrency index fund. Participation in the “Coinbase Index Fund” will be limited to accredited investors with a minimum net worth of $1 million. The minimum initial investment will be $10,000 USD.
Coinbase also release an official announcement: “Coinbase Index Fund will give investors exposure to all digital assets listed on Coinbase’s exchange, GDAX, weighted by market capitalization. If a new asset is listed on the exchange, it will be automatically added to the fund. 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. At this stage, investing in Coinbase Index Fund will only be available to US-resident, accredited investors. We’re working on launching more funds which are available to all investors and cover a broader range of digital assets.”
The fund will be market-cap weighted, tracking four of the biggest virtual currencies, being comparable to traditional index funds that mirror the performance of the S&P 500 or the entire stock market. The fund will be composed of 62% bitcoin, 27% ethereum, 7% bitcoin cash, and 4% litecoin, which matches proportionally each one's market cap.
Investors currently buy into cryptocurrencies on Coinbase with U.S. dollars, the same way equities investors buy stock. Coinbase Index Fund will allow investors to hold cryptocurrencies indirectly through shares.
Portfolio managers try to beat the market with well-timed bets, but managed funds almost always underperform compared to their passive competitors, only rarely outperforming index funds.
Perianne Boring, Chamber of Digital Commerce president, said “It appears that Coinbase has structured this to fall within a recognized exemption to securities registration requirements. Coinbase’s new index fund is another example of the maturation of the cryptocurrency and blockchain ecosystem.”
You can apply to invest in the Coinbase Index Fund at https://am.coinbase.com.
By: BGN Editorial Staff