Coinbase Eyes Bitcoin ETF With New Cryptocurrency Index Fund


Coinbase has already been dubbed the Goldman Sachs of Bitcoin. Now, the most popular U.S. cryptocurrency exchange will let you buy Bitcoin and other top cryptocurrencies listed on Coinbase through a new fund, rather than trading them directly on the exchange.

In launching the Coinbase Index Fund Tuesday, the San Francisco-based startup—whose $1.6 billion valuation makes it the cryptocurrency industry’s most valuable—is entering the asset management business, positioning itself to become a much broader financial services firm, if not a full-blown bank. In November, Coinbase surpassed Charles Schwab in number of customer accounts.

The index fund, which will invest in the same cryptocurrencies traded on Coinbase and its institutional exchange GDAX—currently including Bitcoin, Ethereum, Bitcoin Cash and Litecoin—will be available only to U.S. accredited investors, or those who have annual income of at least $200,000 or a net worth of at least $1 million. But Coinbase is hoping to launch a similar fund available to all investors regardless of wealth, likely structured as an exchange-traded fund (or ETF), pending regulatory approval.

“We are working towards funds that will be available to all retail investors,” Reuben Bramanathan, product lead for the Coinbase Index Fund, told Fortune, calling it “the first priority.” That includes fulfilling all regulatory requirements, he added. “We’re expecting huge demand from retail when that’s available, and we want to be in a position to accept that demand.”

Still, Bramanathan declined to provide a timeline for when the company expected to offer the retail fund, or for when exactly the Coinbase Index Fund would actually begin trading, though it is currently accepting applications. The Coinbase Index Fund, which requires a minimum investment of $10,000 and weights its cryptocurrency holdings proportionately by their market caps, would have returned about 995% over the past 12 months, an increase of nearly 11-fold. Bitcoin alone, by comparison, returned about 754% (an 8.5-fold gain) over the same period.

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