The Strategist

Coinbase launches index fund for cryptocurrencies

03/08/2018 - 10:34

The popular American cryptocurrencies trade platform Coinbase announced launch of the Coinbase Index Fund. The new tool will allow investors accredited in the US to work with all already existing and future assets in the framework of the GDAX exchange.

Jon Russell via flickr
Jon Russell via flickr
Coinbase Index Fund will enable investors to watch performance of the digital assets class in general. In other words, they won't have to choose any specific crypto currency anymore. Besides, the trading platform introduces the Coinbase Index, which will display monetary performance of all GDAX assets by their market cap.

The minimum deposit size for participation in the fund is $ 10 thousand. The fee for managing funds is 2%. There is no incentive commission, which is not so common in traditional markets, but it already becomes the norm for crypto-currency passive investment mechanisms.

The index fund will be the first tool of the new Coinbase asset management division. The basket will include all the digital assets represented on GDAX in the following ratio: 62% - bitcoin, 27% - Ethereum, 7% - Bitcoin Cash, 4% - Litecoin. Coinbase will rebalance the basket when new digital currencies appear on GDAX.

The new investment tools will not be limited to the GDAX offering, but today this approach is the best for maximizing liquidity.

Investors can deposit both in US dollars and in any of the crypto-currencies represented in the fund. Currently, Coinbase only accepts American accredited investors, but in the future plans to lift this restriction. Deposits can be made on a monthly basis; withdrawals are made quarterly. The period of restriction on withdrawal of funds is not provided. All funds invested by investors will be kept in "cold" wallets.

Recall that earlier Grayscale launched cryptocurrency trust fund, tied to Ethereum, Litecoin, Ripple and Bitcoin Cash. Each fund is part of the Digital Large Cap Fund, which was announced last month, but was not previously available separately. Executive director of Grayscale Michael Sonnenshein said that the company is not going to stop on what’s already reached and will continue to issue new products for the clients.