Coinbase Offers Index Fund Tracking Cryptocurrencies on Exchange

The top U.S. marketplace for buying and selling digital coins is offering investors another way to get in on the cryptocurrency craze.

Coinbase Inc. said Tuesday that it’s rolling out the Coinbase Index Fund. The investment vehicle will track the performance of the four tokens that currently trade on the San Francisco-based company’s GDAX exchange to provide customers an easier way to gain wider exposure to the estimated $450 billion market.

“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.” said Reuben Bramanathan, a product manager at Coinbase. “We’re seeing strong demand from institutional and high-net-worth individuals.”

The fund will be weighted by market value and follow Coinbase Index, a newly created benchmark of Bitcoin, Bitcoin Cash, Ether and Litecoin — the digital coins currently available on the exchange. If Coinbase decides to list new assets, they will automatically be added to the index, which will be rebalanced annually.

Customers will be able to invest once per month and withdraw once every quarter, but will not be able to trade shares in the passively managed fund, which won’t be listed on an exchange, Bramanathan said.

Coinbase wasn’t the first to come up with the idea. San Francisco-based Bitwise Asset Management said Oct. 2 that it was starting a fund that would follow a basket of the biggest digital currencies. Four days later, Fundstrat Global Advisors — the research boutique that counts Bitcoin bull Thomas Lee as its co-founder — announced plans to create crypto indexes to track the performance of some 600 digital tokens.

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