Coinbase Launches Cryptocurrency Index Fund

Coinbase Launches Cryptocurrency Index Fund

Mar 7, 2018

Leading cryptocurrency exchange and brokerage firm Coinbase has announced the creation of a cryptocurrency index fund that will track the performance of the large-cap assets that are listed on the company’s trading platforms.

Coinbase Launches Cryptocurrency Index Fund

The market cap-weighted fund will track the Coinbase Index, a newly-launched benchmark for the four cryptocurrencies currently listed on the exchange: bitcoin (BTC), ethereum (ETH), bitcoin cash (BCH), and litecoin (LTC).

Coinbase cryptocurrency index fund
Source: Coinbase Asset Management

The index will be rebalanced annually and will be updated whenever the company adds support for a new asset.

“Index funds have changed the way that many people think about investing,” the company said in a statement accompanying the announcement. “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.”

At launch, the fund will be restricted to accredited investors. However, the company said that it is actively working with regulators to make it available to retail buyers in the future.

Coinbase, Grayscale Build Out Crypto Hedge Fund Alternatives

The Coinbase Index Fund will be a direct competitor to Grayscale Investments’ Digital Large Cap Fund, which opened last month and provides accredited investors with market cap-weighted exposure to the five largest cryptocurrencies — including Ripple (XRP), which is not currently listed on Coinbase.

Grayscale also offers seven funds that hold individual cryptoassets. The most well-known Grayscale fund is the publicly-quoted Bitcoin Investment Trust (OTC: GBTC), which is the only one of the firm’s funds that retail investors can purchase on the secondary market.

Notably, investors will be able to contribute to Coinbase’s fund using any of the cryptoassets listed on Coinbase, while Grayscale customers are restricted to USD.

Both funds also provide institutional investors with lower-cost alternatives to cryptoasset hedge funds, which have soared in popularity — and number — over the past 18 months.

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Featured Image from Todd Haselton | CNBC