Industry leader Coinbase, by far and away the most popular place for most folks to buy cryptocurrency, has announced that it plans to expand even further by launching a cryptocurrency index fund.
The passively managed fun will have a $10,000 minimum investment and currently it is only available to accredited U.S. investors who will pay a two percent annual management fee. There is no performance fee, which as Techcrunch points out is fast becoming the norm for “crypto-specific passive investment vehicles.” Coinbase hopes that it won’t be long before it can remove the ‘U.S.-only’ investor restriction.
This is the first investment product form Coinbase’s recently developed asset management division and it will include all digital currencies trading on the GDAX, each weighted by a market cap. According to Fitz Tepper at Techcrunch this means, “at launch it will be comprised of 62 percent Bitcoin, 27 percent Ethereum, 7 percent Bitcoin Cash and 4 percent Litecoin.” These figures will be rebalanced when a new asset is introduced.
Coinbase doesn’t plan to stop there; it also has its sights set on offering an investment vehicles that aren’t limited to cryptos listed on GDAX, although this is very much a future venture and the company has not indicated when these are likely to launch.
The Coinbase fund dates back to 2015 and the launch of GDAX, and since then it has delivered returns in the region of 4,900 percent, which sounds fantastical, but when one considers the movements in the crypto markets during 2017, are actually quite believable.
The Coinbase Index Fund assets will be held in cold storage, which is good news for investors, although the U.S.-based firm already has an excellent track record on security issues, and even has its own product, Coinbase Custody, which provides cold storage to other investment funds.
Coinbase may not be the first to develop a passive crypto fund, but it is such a massive name in the industry, and so many existing platforms already use some Coinbase service, that it is likely to outperform its competitors with ease.