Coinbase is eyeing Bitcoin ETF with its new cryptocurrency index fund, which will let users buy digital currencies directly rather than trading them on the exchange.
The Coinbase Index Fund launched Tuesday, signaling that the San Francisco based company has entered the asset management business. It positions the company to become a much broader financial services firm — if not a full bank.
Nevertheless, it was this past November that Coinbase surpassed Charles Schwab in number of customer accounts.
Reuben Bramanathan, product lead for the Coinbase Index Fund, talked about this new launch, calling it the first priority for the company. More importantly, this also includes fulfilling all regulatory requirements:
“We are working towards funds that will be available to all retail investors. We’re expecting huge demand from retail when that’s available, and we want to be in a position to accept that demand.”
The index fund will only be available to accredited US investors who have an annual income of at least $200,000 or a net worth of at least $1 million.
But Coinbase also hopes to launch a similar fund available to all investors regardless of wealth, likely structured as an ETF, or exchange traded fund. Pending regulatory approval, of course.
The company is yet to provide a timeline for when it expects to offer the retail fund, or when exactly will the Coinbase Index Fund would actually begin trading. It is currently accepting application, taking investment in the US dollars as well as cryptocurrency.
As for fees, the Coinbase Index Fund is charging a fee of 2% of assets under management, which is much higher than comparable passive stock market funds.
S&P index funds, as an example, are priced as low as 0.5% of assets.
But since few other options exist for investing in cryptocurrency as easily as stocks, these types of funds are able to command a premium.