After just four months, Coinbase decided to close down its Index Fund.
When the fund was first announced, it offered accredited investors the chance to capitalize on crypto growth with zero performance fees and a small annual charge. The fund tracked Coinbase’s proprietary Index, matching returns against the market-cap weighted movements of Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and 0x for example.
Now, it’s been shut down just months after launching.
There are three reasons why the company is doing so.
One, Coinbase is no longer seeing the “overwhelming interest” from investors
Weeks ago, the company said it was seeing “overwhelming interest” from investors. However, if that were true, they wouldn’t close down the Fund.
Then again, we have to consider that when the idea came to light, cryptocurrencies were skyrocketing. The bear market in coins put an end to the party quick. We also have to consider that perhaps institutional interest they wouldn’t have announced a reduction of annual management fees in August 2018.
As good as the reduction appeared, it wasn’t enough to produce “overwhelming interest.”
Two, Adam White, the head of the crypto-platform left
Adam White helped Coinbase pick millions of customers but left in early October. Shortly after, it was found that he left for Bakkt, which is launching shortly.
Besides standard trading, Bakkt will offer clearing and custody via cryptocurrency, as well as warehousing. Additionally, they will deliver physical, same-day contracts, backed by the USD, GBP, or EUR. For the company, this system is their solution to the ETF problem that cryptocurrency is facing. The Securities Exchange Commission has taken issue with Bitcoin ETF’s lack of physical ownership. Finally, the platform will support Bitcoin (BTC) to fiat conversion, which is uncommon for exchanges.
Three, Coinbase is returning to its retail roots
“We will focus on providing diversified exposure to all investors through Coinbase Bundle. Coinbase Bundle is an easy-to-use, low-cost tool provided through the Coinbase Consumer platform. [….] We’ve decided to refocus the resources devoted to managing the Coinbase Index Fund to other parts of the business,” says the company, as quoted by Brave New Coin.
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