Coinbase is launching a Bitcoin yield fund on May 1 for institutional investors outside the US, targeting annual returns of 4% to 8%. The fund aims to fill the gap in passive income options for Bitcoin holders by using a cash-and-carry strategy. Backed by various investors including Aspen Digital, the fund seeks to minimize investment risks for institutions.
Coinbase, currently the third-largest cryptocurrency exchange globally, is set to debut its Coinbase Bitcoin Yield Fund on May 1. This initiative is aimed at providing institutional investors, especially those located outside of the United States, with a means to gain exposure to Bitcoin (BTC). According to a blog post from April 28, the fund is expected to deliver an annual net return ranging from 4% to 8%, which is quite appealing given the current market conditions.
The motivation behind this launch is clear: there’s a growing demand from institutional clients for Bitcoin yield. Coinbase Asset Management expressed their enthusiasm in the announcement, stating that they are eager to respond to this demand. Backing the fund are several investors, including Aspen Digital, a regulated digital asset manager based in Abu Dhabi.
The way the fund plans to generate yield is through a cash-and-carry strategy, which capitalises on the differences between spot Bitcoin prices and its derivatives. Notably, Bitcoin holders don’t have the option to earn passive income through staking like holders of Ether (ETH) or Solana (SOL). Coinbase highlighted this gap, emphasizing that Bitcoin yield funds have been introduced to tackle this shortcoming. However, these typically come with significant investment and operational risks for institutional investors.
The Coinbase Bitcoin Yield Fund aims to mitigate those risks, making it more suitable for the risk profiles of institutional investors. This move could potentially attract more traditional finance into the cryptocurrency space, paving the way for broader acceptance of Bitcoin-related financial products.
