Coinbase Inc., the popular cryptocurrency exchange, is launching a weighted index fund for digital currencies as it enters the asset-management business for the first time.
Coinbase President and Chief Operating Officer Asiff Hirji made the announcement Tuesday afternoon on CNBC’s “Fast Money.”
“It’s a very simple to use, easy way to get exposure to the crypto-assets that we offer on our exchange,” Hirji told CNBC.
The San Francisco-based startup, which is valued at about $1.6 billion and in November surpassed stock brokerage Charles Schwab Corp. SCHW, +2.09% in customer accounts, said the new Coinbase Index Fund will give clients exposure to all assets listed on the company’s exchange. For now, that is limited to four cryptocurrencies: bitcoin, bitcoin cash, ether and Litecoin. The index will be weighted by market capitalization.
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“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,” Coinbase product manager Reuben Bramanathan said in a blog post. “We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole.”
When Coinbase lists additional digital currencies, they will be automatically added to the index, he said.
The cryptocurrency industry has boomed over the past year, with a total market cap of about $400 billion as of Tuesday, according to CoinMarketCap.com. Had it existed last year, Coinbase’s index would have gained about 995%. Bitcoin, the leading digital currency, surged about 1,300% last year. It last traded at $10,814 BTCUSD, -1.67% Tuesday evening, down from its peak above $19,000 in December.
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The index fund will be limited, at least for now, to accredited U.S. investors with a net worth of more than $1 million, or earning more than $200,000 a year, Bramanathan told Bloomberg News, and minimum investments will be set at $10,000. Coinbase said it eventually hopes to open trading to all investors, ideally in the form of an exchange-traded fund, if it can pass regulatory hurdles.