The Coinbase Index Fund

Coinbase announced this Tuesday that it is spearheading its own cryptocurrency index fund.  The San Francisco-based company has become one of–if not the most–popular site to buy Bitcoin and other top cryptocurrencies for fiat currency.

Now, they’ll be offering customers what amounts to the Dow Jones or the S&P 500 of crypto assets: the Coinbase Index Fund.

“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,” Coinbase product manager Reuben Bramanathan said on the decision.

Bramanathan claimes that Coinbase has “seen strong demand from [its] customers and the market generally for a passive investment management product,” and president and COO Asiff Hirji told CNBC that the fund will be “a very simple to use, easy way to get exposure to the crypto-assets that we offer on our exchange.”

The company has created the subsidiary Coinbase Asset Management to usher in and preside over the nascent fund.  

For now, the fund itself will consist of those cryptocurrencies listed on Coinbase and GDAX, namely Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.  Additionally, assets in the fund will be weighted according to market value and will be tracked alongside the Coinbase Index.  If the platform adds a currency to its purchasing options, that coin will be automatically added to the index.

The Coinbase Index Fund will only be opened to US citizens and accredited investors.  Applicants either need a $1mln net worth or a $200k annual income to register, and a minimum investment of $10,000 is required to buy into the fund, payable in either USD or the four cryptocurrencies listed on the platform.

So the fund isn’t completely accessible to your average retail investor, but Bramanathan indicated that the company hopes to move to a place where it can eventually accommodate unaccredited investors.

“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.”  

Coinbase expects to launch the index fund within the coming months.