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 seeing strong demand from our customers and the market generally for a passive investment management product…but we’re finally seeing demand so that’s why we’re just launching now,” Coinbase’s Reuben Bramanathan explained to Reuters.
GDAX is Coinbase’s professionals-geared exchange, allowing for more traditional stock-like choices such as market, limit, stop, and margin orders. Coinbase proper, on the other hand, serves more than 13 million retail customers who’ve often claimed it to have been their first foray into crypto, buying and selling. Currently four digital assets are listed and paired, Bitcoin core, Ethereum, Bitcoin cash, and Litecoin. It remains the biggest crypto company on the globe, and is valued at over one and half billion dollars.
“We are seeing new investors coming to the market because they see an asset that is not correlated and outperforms, but they don’t know which ones to buy,” Mr. Bramanathan told Business Insider.
“Index funds,” the company continues, “have changed the way that many people think about investing. 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. We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole.”
Coinbase Index (CBI) reportedly weights by market capitalization Bitcoin core at 62%, Ethereum 27%, Bitcoin Cash 7%, and Litecoin 4%. It’s possible to get a rough sense of its potential value by simulating the index on Tradingview, typing each in the ticker bar (which as of this writing reached almost $7K).
The company cautions, “At this stage, investing in Coinbase Index Fund will only be available to US-resident, accredited investors. We’re working on launching more funds which are available to all investors and cover a broader range of digital assets.” Investors are encouraged to sign up, get onboarded, but it appears CBI won’t be up for a few months due to awaiting legal clarification from the Securities and Exchange Commission (SEC).