Cryptocurrency brokerage platform and exchange operator Coinbase is launching a cryptocurrency index fund, and yes, you can invest with Bitcoin.
Coinbase to Launch Cryptocurrency Index Fund
Coinbase President and COO Asiff Hirji announced the new product on Tuesday during an appearance on CNBC’s “Fast Money.”
Hirji said that the Coinbase Index Fund — which will initially only be available to accredited investors — will hold market cap-weighted positions in the four cryptocurrencies currently listed on GDAX, the company’s order-book exchange — as well as any cryptoassets that are added to the platform in the future.
This means that, when it opens, Coinbase’s cryptocurrency index fund will hold positions in Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.
“I think the investors are not going to want to pick specific winners or losers,” Hirji said of those he expects will be attracted to the fund.
Notably, both Hirji and Reuben Bramanathan — the product lead for the new index fund — said that the company’s “first priority” is now jumping through the regulatory hoops necessary to make the fund (and others it hopes to launch in the future) available to 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,” Bramanathan told Fortune.
Invest with BTC, ETH, BCH, and LTC
At first blush, the Coinbase Index Fund appears similar to Grayscale Investments’ recently-opened Digital Large Cap Fund, which holds weighted positions in the five largest cryptocurrencies by market cap. However, there are several subtle differences.
Source: Coinbase
At present, the two funds bear slightly varying compositions. Grayscale’s fund includes Ripple’s XRP token, which is not currently listed on GDAX. Coinbase has also said that it plans to expand its list of supported cryptoassets significantly in the future, meaning that its fund will likely provide investors with exposure to a greater range of assets than Grayscale’s fund — at least down the road.
Moreover, Coinbase allows investors to purchase shares using any cryptocurrency listed on GDAX, while Grayscale investments are limited to fiat. This could prove to be an attractive option for current cryptocurrency investors.
Finally, Coinbase’s fund — which has a two percent annual management fee — is cheaper than Grayscale’s, which charges three percent per annum.
Josiah is the former U.S. Editor at CCN.com, where he focused on financial markets. He lives in rural Virginia. Connect with him on LinkedIn or email him directly at josiah.wilmoth(at)www.ccn.com.
