According to the recent update coming from a source close to Coinbase is that the cryptocurrency exchange is shutting down its index fund aimed at wealthy investors as it shifts its focus to a new retail product. The update also says that firm is pivoting its focus to “Coinbase Bundle,” a recently announced product.
Coinbase feels retail is where the business is
Coinbase in March announced its ambitions to launch a market-value-weighted index fund to offer accredited investors and institutions exposure to the digital currencies trading on its exchange. While announcing Reuben Bramanathan the product lead at Coinbase asset management had said,
“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. We’re excited to give our customers the ability to invest in the potential of blockchain-based digital assets as a whole.”
While the official announcement is yet to happen about the closure and the reason behind it a person familiar with the matter said the index fund product failed to attract the necessary number of clients, raising fewer funds than the firm expected.
As for Coinbase, it is shifting its focus to a new feature dubbed “Coinbase Bundle,” which allows users to purchase in one click a bundle of the coins listed on their 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 will now compete against Circle Financials recently launched Circle Invest, which allows an investor to buy 11 different tokens in a single investment — with an even lower minimum of $10.
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 institutional appetite for exposure to the crypto market is less than it was earlier this year.
Coinbase is known for its broad crypto business, which covers trading, institutional and retail brokerage, and venture capital. Still, it makes sense the firm is focusing on retail, as that is where it got its start with its original brokerage product. With regulatory uncertainty still looming, it seems difficult that institutions would make their way into the crypto markets.
Coinbase has reached this position on the back of its retail business only. It has amassed more than 20 million users. However, active users on the platform are down by 80%, as Bloomberg reported Thursday.
Do this show that the focus of the street is shifting to retail business or institutional? Do let us know your views on the same.
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.