Coinbase is launching its Bitcoin Yield Fund on May 1, targeting institutional investors outside the US. The fund aims to provide annual returns of 4% to 8% and is backed by investors like Aspen Digital. It seeks to fill the gap in passive income generation for Bitcoin holders, using a cash-and-carry strategy to lower typical risks associated with such investments.
Coinbase, known as the third-largest cryptocurrency exchange globally, is set to launch its Coinbase Bitcoin Yield Fund on May 1. This fund is aimed at institutional investors seeking Bitcoin (BTC) exposure outside of the US. As stated in a blog post from April 28, the project aims for an annual net return of between 4% and 8% on its Bitcoin holdings.
The announcement from Coinbase Asset Management expresses excitement over this initiative, highlighting the rising demand among institutions for Bitcoin yield. Investors backing the fund include Aspen Digital, a digital asset management firm located in Abu Dhabi, which adheres to regulations set by the Financial Services Regulatory Authority.
The expected yield for this fund will stem from a cash-and-carry strategy, capitalising on the differences between spot Bitcoin prices and derivatives. Unlike other cryptocurrencies like Ether (ETH) and Solana (SOL), Bitcoin does not allow holders to earn passive income through staking. Coinbase noted that while Bitcoin yield funds have emerged to tackle this shortcoming, they often come with substantial investment and operational risks for institutional allocators.
The aim of the Coinbase Bitcoin Yield Fund is to mitigate these investment and operational risks, better aligning its offerings with what institutional investors typically seek. This could potentially open the doors for more institutions to invest in Bitcoin products as the market continues to evolve.
