What Are Coinbase Index Fund Restrictions?

what are coinbase index fund restrictions

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Coinbase announced today that it will launch its own cryptocurrency index fund. The signup link for the Coinbase Index Fund is here.

The Coinbase Index Fund is similar to the Bitwise Hold 10 Fund in that it will allow passive investment in the cryptocurrencies that trade on the Coinbase platform.

The asset allocation for the fund will be:

  • Bitcoin: 62%
  • Ethereum: 27%
  • Bitcoin Cash: 7%
  • Litecoin: 4%

Coinbase Index Fund Asset Allocation

Coinbase is the clear leader in the online cryptocurrency investment world. At least in the U.S.

Recently, Circle’s acquisition of Poloniex put it on the path to compete with Coinbase. Kraken has also established a reputation for itself (though not without problems).

Coinbase Index Fund Restrictions

Coinbase is the easiest platform for individuals to start trading cryptocurrencies.

Coinbase offers payment by credit card which makes it incredibly easy to get started if you’re just playing around. Indeed, its platform has become so popular that it is approaching Charles Schwab and Vanguard in the number of accounts it manages.

Perhaps one day Coinbase will be worth more than Bitcoin itself…

The Coinbase index fund will have some restrictions for investors, however:

  1. Investors must be accredited.
  2. The minimum investment size is $10,000.
  3. The fund is limited to U.S. residents.

That said, the fees for investment are relatively low. At least compared to the Hold 10 Fund. Fees for managing the Coinbase Index Fund is 2% annually, and no performance fee.

The 2% is less than what it would cost you to trade on Coinbase using a credit card in most situations…. And the fund is managed for you.

Considering the performance of cryptocurrencies over the past few years, it may be worthwhile. That said with tongue firmly in cheek while repeating the classic mantra that past performance is no guaranty of future results.

Coinbase Index Fund Fees

Coinbase has developed an excellent reputation for security.

This strikes some with a hint of irony in that Coinbase is a “trusted third party” in a sea of blockchain-based digital investments.

Coinbase owns GDAX, which is a more sophisticated, professional trading platform for cryptocurrencies. The platform allows users to trade cryptocurrencies, such as Bitcoin, Bitcoin Cash, Litecoin and Ether almost for free, at least when compared to trading on Coinbase itself.

Although some have speculated that Ripple will be added to Coinbase, I doubt this will ever happen.