Coinbase which is the top US marketplace or the selling and buying of digital coins has offered another way of getting in on cryptocurrency craze. In Tuesday, Coinbase reported that it was on the plans to roll out the Coinbase index fund. Therefore, the investment vehicle is meant to track the performance of four tokens which are currently on trade in the San Francisco based GDAX exchange. This is meant to provide the customers with easy ways of gaining exposure to the estimated $450 billion markets.
Reuben Bramanathan (Coin base product manager) statement;
“We are noticing people coming to 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. We’re seeing strong demand from institutional and high-net-worth individuals.”
Therefore, the fund will be weighted by the market value and then the Coinbase index. Coinbase index is a newly created bitcoin, bitcoin cash, ether and Litecoin benchmark. These are the digital coins which are in the exchange currently. Therefore, in case Coinbase decides to list new assets, these will be added to the index which is balanced annually.
Customers will have the ability to invest only once in a month and withdraw every quarter. However, they won’t have the ability to trade shares in passively managed fund.
According to past information, Coinbase was not the pioneer in this ides. Bitwise Asset management which is a San Francisco based organization last year stated that they would start the fund. It was as a basket for the largest cryptocurrencies. In the case of Coinbase, only the US investors will be able to buy in the fund. This is because doing this with the less experienced individuals might have a regulatory challenge. This is according to Bramanathan. Investors must have a net worth of around $1 million or $200,000 per year. Additionally, the minimum investment amount is $10,000.
According to Bramanathan;
“When people think about a retail index fund, they’re talking about an ETF, and that’s obviously a long process to launch. Our objective here is to get to a position where we do launch a fund that’s available to retail, but given the regulatory hurdles, we wanted to offer something to institutional and accredited, to begin with.”