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Coinbase Index Fund Adds ETC, Minimizes Fee To Charm Investors

The market has tumbled by over 5%, but this has not stopped the development of cryptocurrency products from moving forward. As Ethereum World News reported previously, the Coinbase Index Fund was launched in mid-June, opening its doors for accredited investors willing to allocate a minimum of $250,000 to up to $20 million to this fund.

The fund works as follows — the assets supported by the fund are weighted by market capitalization and then added to the product as such. So an investor who invests $1 million in the fund today would get $720,000 of Bitcoin, $190,000 of Ethereum, $20,000 of Litecoin, $60,000 of Bitcoin Cash and $10,000 of Ethereum Classic.

However, upon the release of the institutional-focused products, some investors expressed worries about the fees and lack of support for a wide range of crypto assets. But as a Medium post from Coinbase Asset Management alludes to, these worries are being addressed with two new improvements that will be implemented into the firm’s in-house index fund.

Coinbase’s Bid To Attract Investors

Firstly, the premier cryptocurrency platform revealed that it would be reducing its management fee for the Coinbase Index Fund to 1% annually. This is a hefty 50% reduction in fees as Reuben Bramanathan, the Product Lead at Coinbase Asset Management, alluded to in the following comment:

“We’re pleased to announce that we are reducing the annual management fee for Coinbase Index Fund from 2% to 1% for all new and existing investors.”

The Coinbase executive went on to explain the reasoning behind this reduction, noting that this move was made to “attract investors who are familiar with lower-fee index funds in other asset classes.” Hopefully, this decrease to a bare minimum fee should entice institutional investors to invest into this flowering asset class, which may be needed in a today’s bearish market. This just might be a primary catalyst that may bring vast amounts of institutional interest into this market, driving adoption, innovation, and prices to new all-time highs.

Secondly, the Coinbase Index has been rebalanced to include Ethereum Classic (ETC) to account for last week’s listing of ETC on Coinbase’s array of products. This move was not unexpected, as a post from the cryptocurrency giant mentioned ETC support for the index fund. Along with announcing investor “exposure” to ETC, Bramanathan noted that the fund will continue to add assets moving forward, including the five cryptocurrencies (Cardano, Basic Attention Token, Stellar Lumens, ZCash, 0x) mentioned in a previous announcement.

This is just another move that brings validation to Ethereum Classic, which has been mentioned in headlines all across the industry as of late. Over the past weeks, ETC/USD support has been added to Coinbase as aforementioned, Robinhood and Bittrex, which will only increase the amount of fiat inflow this asset sees in the future.

Many are hopeful for the success of this product, as many believe that an influx of institutional interest can right the sinking ship that is the current cryptocurrency market.

Photo by Samson Duborg-Rankin on Unsplash

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Coinbase Launches Index Fund For Its Large Investors ($250k to $20 Million)

Coinbase has successfully launched its eagerly awaited Index Fund just yesterday, Wednesday June 13th. The Index Fund is specifically catered for the platform’s large investors with willing to invest funds ranging from $250,000 to $20 Million.

In the announcement by the company’s Product Lead, Reuben Bramanathan, the Index Fund was created because there was an overwhelming interest from investors about the product since the idea was put forth back in early March. The Index Fund will give investors exposure to all assets listed on the exchange and shall be weighted according to the market capitalization of each digital asset. The new product is currently only available to US residents and accredited investors.

The exchange is working on launching more funds which are available to all investors and which cover a broader range of digital assets.

Coinbase currently supports Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC) and Ethereum Classic (ETC) that was recently listed.

However, the Coinbase Index Fund is currently only composed of Bitcoin (61.49%), Ethereum (27.19%), Bitcoin Cash (8.27%) and Litecoin (3.05%). Ethereum Classic will be added at a yet to be announced date in the future.

Investments of the new product will be accepted in USD with a monthly investment window. Anyone willing to redeem their investments from the fund has to give a 30 days notice with the redemption only available on a quarterly basis. There will also be a 2% management fee by the platform.

Coinbase launches the product in a period of uncertainty with the crypto-markets being affected by the Coinrail hack as well as the ongoing investigation of 4 cryptocurrency exchanges by the CFTC (Commodity Futures Trading Commission) with regards to their involvement in possible Bitcoin manipulation since last year.

As a result, the total crypto-market capitalization has dropped below $300 Billion and currently stands at $280 Billion. Bitcoin, being the King of Crypto, is currently trading at $6,530 with a gain of 0.08% in 24 hours. This is some welcome stability for the last four days have been a period of constant decline of not only BTC, but all the other digital assets available.

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Coinbase Drawing Fire From All Sides: What’s Going on at US’s Biggest Exchange?

As the saying goes, tall trees catch much wind,’ and for Coinbase, especially this week, this seems to be true. The seventh biggest exchange through transaction volume, as shown on Coinmarketcap is also the biggest exchange in the US. So, being at the top, it has caught a lot of flak and made a lot of news this week.

Coinbase is an important junction in the cryptocurrency ecosystem, and it has shown on a number of occasions that its influence and direction can shape the entire marketplace globally.

Its decision to integrate SegWit recently saw an upswing in those types of transactions, but on the flipside, its decision to offer Bitcoin Cash also pumped that market- in what is being called insider trading by some. Even rumors about Ripple integration have had its effect on the coin.

In the news this week alone, Coinbase has been sued twice, once for the insider trading allegations, and once for allegations that it “kept” funds that its users sent via email, but which recipients never claimed. It has also been linked to Ripple, again, and has had to deny that- which has caused swings in the Ripple price. Finally, it is still forging ahead as a pioneering crypto ecosystem with its latest offering an index fund.

Laying out lawsuits

Coinbase is no stranger to lawsuits and legal battles, having faced a few days in court before, as well as having fended off the IRS in their quest to obtain users’ trading information through the exchange. But fresh allegations have emerged, dating back to their decision to integrate Bitcoin Cash onto the platform.

At the end of December last year, Coinbase decided to add Bitcoin Cash to their offerings. This saw the price of the forked currency soar, while Bitcoin started to drop off.

Immediately, accusations flew that Insider trading was happening, despite the company making it clear that employees had been restricted from trading BCH on the site for a number of weeks prior to the announcement.

Now, a class action lawsuit has emerged from one of the Coinbase users based in Arizona, Jeffrey Berk. The plaintiff accuses Coinbase of “artificially inflated prices” by means of disclosing buy and sell orders moments after Coinbase launched BCH support. CEO Brian Armstrong said at the time of first allegations, in a blog post: “If we find evidence of any employee or contractor violating our policies,  directly or indirectly,  I will not hesitate to terminate the employee immediately.”

Unfair business practices

This lawsuit comes months after the allegations were laid, but is put forward: “on behalf of all Coinbase customers who placed purchase, sale or trade orders with Coinbase… during the period of Dec. 19, 2017 through and including Dec. 21, 2017… and who suffered monetary loss as a result of defendants’ wrongdoing.”

Additionally, while fielding this lawsuit, Coinbase has also been accused of keeping hold of funds sent by email which were never claimed by their recipients. It is another class action lawsuit that the exchange will have to handle delicately as it looks to keep its reputation intact in a space where there are a number of scam and badly run cryptocurrency services.

To lawsuit has been brought forward to the District Court for the Northern District of California by Restis Law Firm on behalf of two Coinbase users seeks reimbursement of the funds, including those sent involving now-expired email addresses. It is claimed that Bitcoin, which was emailed to people prior to the mainstream acceptance and understanding of digital currencies went unclaimed in many emails, and, instead of returning the coins, Coinbase simply kept hold of them. This falls under the gambit of unfair business practices being leveled at the exchange.

Both of these lawsuits, of course, do not paint Coinbase in the best of lights, despite them only being allegations currently. The negative press associated with bad practices and insider trading can be damaging, and for a company like Coinbase, it is not what is needed as they aim to be a positive precedent setting crypto solution.

It is negative news that is being picked up by some influencers in the community as Tone Vays, Host of CryptoScam podcast, points out how much of their energy and funds are going to just keep afloat with all the legal battles.

Ripple Rumors

One aspect, that they have dealt with before, and have had to deal with again this week, is the rumors that they would be introducing RIpple to the exchange. They have again vehemently denied this, which has had its effect on the Ripple Price.

The company quashed the rumors this time in another blog post by Armstrong as he stated:

“As of the date of this statement, we have made no decision to add additional assets to either GDAX or Coinbase. Any statement to the contrary is untrue and not authorized by the company.”

The effect of this rumor, and then the quashing of it, showed quite prominently in Ripple’s price graph, but, as Matt Odell on Twitter, surmises, Ripple may well still make its way to Coinbase in the same manner in which Bitcoin Cash appeared on the exchange.

The blog post goes further to outline the process that Coinbase follows when making a decision to add a new coin to its stable, and as one can imagine, it is not a simple process. Coinbase faces a lot of scrutiny and has many watchful eyes on them when making big calls, and thus it is up to them to make sure it is executed perfectly, for their own well-being, and that of the entire crypto market.

Forging ahead

It is not all doom and gloom for Coinbase as they look to put out fires along the way. The most recent move by the exchange is to move them in somewhat of a different direction, offering weighted index fund for cryptocurrencies. What this means is that, for US citizens, there is a chance for investors to exposure to all assets listed on the company’s current exchange, GDAX, depending on their market capitalization.

This is a step in a slightly different direction for Coinbase as they expand their market to reach those who are perhaps more akin to traditional investments, broadening the net and amalgamating crypto and traditional assets.

Still, as with the fires they are trying to put out in the lawsuits, the Index fund has been met with mixed reviews.

Managing partner at Full Tilt Capital, a venture capital firm and real estate solutions company that has its eyes on crypto, Anthony Pompliano, believes this is a crossing over of traditional and crypto investors.

However, the move is confusing to Meltem Demirors, vice president at Digital Currency Group as she states the same thing can be achieved on the Coinbase platform without the need for the two percent charge.

Frank Chaparro, a well-regarded cryptocurrency writer for Business Insider also drew people to the fact that this move by Coinbase is one that is aimed at “tap[ping] Wall Street’s appetite for cryptocurrency” in a tweet that linked to his article.

Eyes on Coinbase

Like it or not, Coinbase’s prominence as a cryptocurrency platform, in a country with such high media coverage as the US, puts it in the public eye, and as such, it garners attention from all sides. Even other platforms are keeping an eye on what Coinbase does, and how it handles certain situations, in order to navigate their own way through the unprecedented cryptocurrency ecosystem.

Mati Greenspan, the senior market analyst of trading platform eToro, mentions how even though they are based in the UK, the two companies work together somewhat in order to keep abreast of things such as regulations and trends.

“In the UK, we work with Coinbase and other leading platforms and exchanges through Crypto UK, a self-regulatory trade body designed to set standards for the industry, so it’s a collegiate relationship.”

As Coinbase continues to try and set a bar of expectation for cryptocurrency services, it faces an uphill battle against regulators and broaching new territory. However, it is important to have established pioneers, but ones that can be trusted, working to define this new ecosystem and industry, even if it is simply to lay a workable path down.

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Coinbase Launches Index Fund for Digital Currencies

Cryptocurrency exchange Coinbase has announced that it is launching an index fund for digital currencies.

In a blog announcement, the San Francisco-based exchange explained that the Coinbase Index Fund would give accredited investors, with a minimum $10,000 investment, exposure to all digital assets listed on Coinbase’s exchange, GDAX. It will be weighted by market capitalisation. At present, it’s only available to U.S. residents due to the U.S. Securities and Exchange Commission’s regulatory oversight.

It reads:

“Index funds 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.”

Speaking on CNBC’s ‘Fast Money’ yesterday, Asiff Hirji, Coinbase President and COO, said that the index fund would be ‘very simple to use.’

Similar to the Dow Jones Industrial Average, which lists 30 stocks aimed at painting a picture of the American economy, the Coinbase Index Fund will attempt to illustrate the cryptocurrency market.

Out of the top five digital currencies on the market, Coinbase offers bitcoin, ethereum, bitcoin cash, and litecoin. It doesn’t offer Ripple’s XRP token.

The exchange quashed rumours yesterday that it was going to be adding the third-biggest cryptocurrency to the exchange after speculation that Brad Garlinghouse, Ripple’s CEO, and Hirji were due to appear on CNBC’s ‘Fast Money’ special edition. It was thought that the two would take the opportunity to make an announcement. As a result of the new asset rumours on Coinbase, the altcoin’s value rose above $1, to $1.05 on Monday.

However, since Coinbase denied any new assets would be added to the exchange, the XRP token fell back below $1. According to CoinMarketCap, it is currently trading at $0.916466, at the time of publishing.

With over 1,500 cryptocurrencies in the market Hirji explained that the company is cautions when it comes to adding new currencies as there is plenty of ‘rubbish out there.’ The blog post states, though, that when a new asset is listed on the exchange, it will automatically be added to the fund.

Hirji added:

“There has been a lot of discomfort from the SEC around a lot of these ICO-based tokens. We’re not going to be the ones operating in the black.”