The SPY Of Crypto? Coinbase Launches Cryptocurrency Index Fund

in coinbase •  last year 

Content adapted from this Zerohedge.com article :Source


Coinbase announced Tuesday that it would be introducing a cryptocurrency index fund. This is a fund that will be weighted in cryptocurrency similar to what the SPY does with stocks.

The company will be using the currencies that are presently traded on the GDAX exchange.

What is not impressive to investors is the fact that Coinbase only carries a handful of currencies available for trading. One token that investors were hoping would be added was Ripple. It looks like that will not happen with this recent decision.

We’re excited to announce Coinbase Index Fund.

Coinbase Index Fund will give investors exposure to all digital assets listed on Coinbase’s exchange, GDAX, weighted by market capitalization. If a new asset is listed on the exchange, it will be automatically added to the fund.

Index funds have changed the way that many people think about investing. 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. We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole.

There was no date given for release and will only be available to U.S. residents initially. Over time, the company hopes to expand the offering to people from other areas of the world.

During an appearance on CNBC, Coinbase COO Asiff Hirji said crypto is "an asset class" and that "individual investors, they tend to trade in funds, and they tend to trade in index funds, passive investing. That's why we've created the index and we've created the index fund to enable that."

Importantly, the company also said it would add more coins to its platform as it vets them and there is more "regulatory certainty."

"We are committed to adding more assets to the exchange. If we add an asset to the exchange, it will show up in the fund. It will be market-cap weighted. We have a framework for how that works," Hirji said. "We’re trying to make this super simple," he added.

The fund will have a minimum investment of $10,000 with a 2% fee. Unlike hedge funds, there are no performance fees.

Coinbase is hoping to capture the passive investor with this fund. Index funds became extremely popular over the last decade as passive investors sought out ways to lower their risk and minimize fees.

Non-adapted content found at zerohedge.com: Source


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For me that’s a great news since I’m a Coinbase and TD ameritrade customer. I will definitely look at the index once it’s available. There is already crypto company on stock exchange I’m invested in (symbol GBTC) Bitcoin Investment Trust holds bitcoins and, from time to time, issues creation baskets in exchange for deposits of bitcoins. The activities of the Trust also includes transferring actual bitcoins in exchange for Baskets surrendered for redemption by the authorized participants, causing the sponsor to sell bitcoins on the termination of the Trust. Which means if bitcoin goes up GBTC goes up as well and you can buy it for much less then bitcoin itself.
Thanks for this great news!

When you’re the runaway leader in a growing industry, you typically have two opinions: A) Stay in your lane and let other companies pop up to solve the industry’s problems, or B) Try to offer as many products as possible and own the entire customer experience from A-Z (no Amazon pun intended).

If there’s any doubt which option Coinbase is gunning for, that’s now gone. The digital currency giant just announced they’re expanding in yet another direction by launching a passively managed cryptocurrency index fund.

The fund will have a $10,000 minimum and charge a 2 percent annual management fee with no performance fee, which is rare for most traditional investment funds, but luckily is becoming the norm for crypto-specific passive investment vehicles.

This is interesting news a day or two after it was announced that Coinbase was being sued for insider trading.

I guess they are moving into the realm of Goldman Sachs and JPMorgan quicker than we think. Ultimately, when there is so much money on the line, I guess people cannot help but to behave in an unethical way.

As for the index fund itself, it could be a great idea. The challenge is the SEC already shot the idea down and issued 4 criteria that needed answering. The big one that I remember is who holds the keys and what do they do with them. When you have an Index fund, is it in Coinbases hands or another entity.

Of course, this puts it at greater risk of hacking if they are all in one honeypot.

well, i believe every cryptocurrency exchange is working hard toward bringing something new to attract more investors. I know many more other crypto exchange will follow on what coinbase has just done.

This implies that there are millions and soon billions of people winding up to join the cryptomarket and the strongest exchange will have to stand. This means there is a need of having enough funds and the available innovations to bring millions of customers on board.

"We are committed to adding more assets to the exchange. If we add an asset to the exchange, it will show up in the fund. It will be market-cap weighted. We have a framework for how that works," Hirji said.

I just like this sentence. This Shows Hiriji's comitment toward performing real tasks and doing all the possible ways to fully satisfy or fill customers expectations.

@jona12

This is massive news from the world’s largest cryptocurrency company. Trading is being taken a step farther. The cryptocurrency market is going to have lots of activity as people from the far reach areas get a chance to trade their favorite coins on the market cap. Exchanging on coinbase has been the most user-friendly experience I've had in trading. And this new launch is going to attract more traders who are not using coinbase who will find it easy in trading when they give coinbase a shot. The world is going crypto and these new trends coming in daily are some of the signs showing where the market is going.

Nobody on wall street would be interested in this, other than maybe people who work in the mail room.

This index fund is more or less the equivalent of an ETF (Exchange Traded Fund) in the stock world, which is basically a package of stocks for those who want to invest without having to do research or learn how to perform trades themselves. In the stock world there are ETF's for foreign currencies, specific sectors like tech or healthcare, commodities like gold and oil, etc. This will be the first "crypto-ETF" if you want to call it that.

It's insanely primitive in the sense that it will only have 4 coins for now. Also, if you're an uninformed, non-tech savvy person who was interested in crypto, you could have easily gone onto CB and purchased BTC with fiat and called it a day.

This is a cool feature for CB, but not something that will attract a meaningful number of new buyers in my opinion.

Insanity, Coinbase needs to start opening its eyes to the main issue here. There are thousands of customers that have been waiting months for their support tickets to be properly resolved!

Please make that a priority, these announcements are just rubbing salt in the wounds of those waiting for you to dedicate resources to helping the customers that took you to where you are today.

Investment funds are a great way to lower your risk, especially considering that we are talking about cryptocurrencies that are surrounded with a lot of uncertainty. I´m curious to know more about this and especially what will be the adoption of the customers of Coinbase, will they adopt this financial asset massively? or will it be a failure?.

Very good initiative from Coinbase, let's see who is the first Bank to implement something like this, maybe even this year.

Coinbase and Ripple are both two things i cannot come to supporting.

Not really a fan of Coinbase but this is still good news. I can see this attracting some new people to the crypto game.

Here we have coinbase running an overlay on their on coin trading architecture. However, if I can robotically trade mt coinbase accounts then I can have personal control with a simple index trader. Coinbase will use a proprietary bearer network in their data center. Web router inverts, separates that network as open source protocol management, notaries on duty. If I choose, I'll create the candy bar index, it looks like a spreadsheet algorithm, runs fine in the router.

""No date has been set for his release and will only be available to the United States population at the outset. Over time, the company hopes to expand the offering to people from other regions of the world."""
@zer0hedge When it will be available to other countries ?

Very useful information and thanks for sharing.

Introducing diy index fund, available to non-accredited investors: buy a little of each of the 4 coins (BTC BCH ETH LTC) that compose the totality of the coinbase index fund.The best way to rig prices. Unlimited ETF / Index (or whatever they want to call it) supply equals unlimited profits for those who rig markets, thereby negating the law of supply and demand. Hats off to the SEC, CFTC and all other useless regulatory agencies. Free markets have left the building. The power of big campaign donations knows no limit.

@zer0hedge bitcoin is one of the biggest opportunities since the invention of the internet itself.... great times to be around....

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It should make it easier for mainstream investors to gain exposure, however you do wonder if there is not enough cryptocurrencies included.. at present just four?

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NEW YORK (Reuters) - Digital asset exchange Coinbase announced on Tuesday the launch of its first-ever index fund, marking the company’s foray into asset management.
The U.S. firm, the largest cryptocurrency company in the world and most recently valued at $1.6 billion, has formed a subsidiary called Coinbase Asset Management to oversee the new Coinbase Index Fund, product lead Reuben Bramanathan told Reuters.The fund will give investors exposure to all assets listed on Coinbase’s institutional exchange, GDAX, weighted by market capitalization, Bramanathan said. Whenever a new asset is listed, it will be automatically added to the fund.“We’re seeing strong demand from our customers and the market generally for a passive investment management product,” Bramanathan said.

It's suppose to be for retail investors, but they are cutting out the retail investor, only open to accredited investors thus far...investors who can invest $250k...another example of the Big Boys wanting everything to themselves.