Coinbase, the biggest crypto broker, is launching Coinbase Index Fund (CSB) for accredited investors which weights proportionally a basket of assets listed on the exchange.
“If a new asset is listed on the exchange, it will be automatically added to the fund,” says Coinbase. The fund will be managed with a 2% fee, and it will be annually rebalanced to perceive the percentage of each asset proportional to its market capitalization.
Reuben Bramanathan, a product manager at Coinbase, stated:
“We are noticing people coming to the space for the first time, being excited about cryptocurrencies, but not knowing where to start, so we’re excited to give people the ability to get broad exposure to the entire asset class rather than having to select individual investments.”
The criteria for accredited investors to purchase all of the listed asset at once and might to do this through their pensions portfolios will be (i) a net worth of more than a $1 million or (ii) an income over $200,000.
This evolution, according to Bramanathan, might be a step forwards towards a full ETF, stating:
“When people think about a retail index fund, they’re talking about an ETF, and that’s obviously a long process to launch.
Our objective here is to get to a position where we do launch a fund that’s available to retail, but given the regulatory hurdles, we wanted to offer something to institutional and accredited to begin with.”
The rich get in first thanks to the discriminatory Securities Act which prohibits the public from investing in potentially very lucrative, albeit highly risky, deals. Generally limiting them instead to only global corporations.
However, investors can also buy those assets in the same proportional way and enjoy a 2% annual saving in without paying the management fee. However, it is considered to be much more easy to handle one tracker rather all four assets.
“We’re seeing strong demand from institutional and high net-worth individuals,” Bramanathan said and went on explaining that investors will be able to invest only once per month and withdraw once every quarter.
Trading of non-listed on an exchange shares in the passively managed fund will not be permitted and the minimum investment was set at $10,000 and limited to US only.
The nature of the Fund is a bit more restrictive than a NYSE traded ETF or the Swedish ETNs. However, expanding Coinbase’s services base, it will become a force in the space.