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Exchanges

Coinbase is shutting down its fund aimed at big investors as it pivots to a new retail product

Quick Take

  • Coinbase is shutting down its index fund aimed at wealthy investors as it shifts its focus to a new retail product
  • A person familiar with the situation said the fund failed to attract enough interest
  • The firm is pivoting its focus to “Coinbase Bundle,” a recently announced product

Coinbase, the cryptocurrency exchange operator, is shutting down its index fund as it shifts attention to a new retail offering, a person with direct knowledge of the situation told The Block. 

The poster-child of the cryptocurrency market in the U.S., Coinbase in March announced its aspirations to launch a market-value-weighted index fund to offer accredited investors and institutions exposure to the digital currencies trading on its exchange.

A person familiar with the matter said the index-fund product failed to attract the necessary number of clients, raising less dollars than the firm expected. At the time of launch, however, an executive at the firm told Bloomberg News that the company was “seeing strong demand from institutional and high-net-worth individuals.” The number of index providers has grown in 2018, despite the cryptocurrency market’s shrinking size. Other players in the index market include Bitwise Asset Management, Abra, and Mike Novogratz’s Galaxy Digital. The shutting of the Coinbase fund could be an indication that the appetite for exposure to the crypto market is less than it was earlier this year. 

Exchanges

Coinbase launches new basket product, allowing investors to buy 5 cryptos with one click

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Now, Coinbase is focused on a new feature dubbed “Coinbase Bundle,” which allows users to purchase in one click a bundle of the coins listed on its exchange. The retail-aimed product allows users to invest as little as $25 in the basket of coins. It launched at the end of September. It isn’t the first crypto basket product available, to be sure. The team at Circle launched Circle Invest, which allows an investor to buy 11 different tokens in a single investment — with an even lower minimum of $10. Circle Invest has solid reviews on Apple’s App Store, though it isn’t especially popular, ranking #734 in finance app, according to App Annie. Unlike an index fund, retail products like “Coinbase Bundle” don’t offer rebalancing or have fixed methodologies. 

Coinbase is known for its broad crypto business, which covers trading, institutional and retail brokerage, and venture capital. Still, the firm’s pivot to retail makes sense, as that is where it got its start with its original brokerage product. It has amassed more than 20 million users. However, active users on the platform are down by 80%, as Bloomberg reported Thursday. 

Aside from the index fund, Coinbase has other ambitions to target wealthier and institutional clients and has brought on the talent to execute on them. Recently, the firm announced starting next year Instinet CEO Jonathan Kellner will lead institutional sales and support. Kellner will play a role in building out an over-the-counter trading business for the firm, following the lead of rivals Kraken, itBit, and Gemini. 

As CoinDesk previously reported, the firm is looking to hire 100 people to build out its New York office aimed at luring Wall Street firms to the crypto markets. 

Coinbase, the cryptocurrency exchange operator, is shutting down its index fund as it shifts attention to a new retail offering, a person with direct knowledge of the situation told The Block.  The poster-child of the cryptocurrency market in the U.S., Coinbase in March announced its aspirations to launch a market-value-weighted index fund to offer accredited investors […]