Meantime, the index fund will allow investments in 4 digital currencies, and limited to accredited investors only
Benjamin Tan 8 Mar, 2018
Coinbase Inc., the controversial exchange, is introducing a weighted index fund for cryptocurrencies as it joins the asset-management business for the first time.
Coinbase President and Chief Operating Officer Asiff Hirji announced on Tuesday afternoon on CNBC's "Fast Money."
" It's a very simple to use, easy way to get exposure to the crypto-assets that we offer on our exchange," Hirji informed CNBC.
The San Francisco-based startup, which is worth at about $1.6 billion and in November outperformed stock brokerage Charles Schwab Corp. SCHW, +1.28% in customer accounts, claimed the new Coinbase Index Fund will give customers exposure to all assets listed on the company's exchange. For now, that is limited to 4 cryptocurrencies: Bitcoin, Bitcoin Cash , Ethereum and Litecoin. The index will be weighted by market capitalization.
" 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," Coinbase product manager Reuben Bramanathan pointed out in a recent article. "We're excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole."
When Coinbase lists additional digital currencies, they will be automatically added to the index, he mentioned.
The cryptocurrency industry has flourished over the past year, with a total market cap of about $400 billion as of Tuesday, as recorded by CoinMarketCap.com. Had it existed last year, Coinbase's index would have achieved about 995%. Bitcoin, the leading digital currency, rose about 1,300% last year. It last traded at $10,814 BTCUSD, -1.35% Tuesday evening, down from its peak above $19,000 in December.
The index fund will be restricted, at least for now, to accredited U.S. investors with a net worth of more than $1 million, or earning more than $200,000 a year, Bramanathan informed Bloomberg News, and minimum investments will be set at $10,000. Coinbase claimed it eventually hopes to open trading to all investors, ideally in the form of an exchange-traded fund, if regulations allows it to.