In a recent press release, popular crypto exchange Coinbase announced that its asset management division will launch a new institutional fund designed to generate sustainable bitcoin-denominated returns for international investors outside the United States. Officially known as the Coinbase Bitcoin Yield Fund (CBYF), the fund aims to provide institutional clients with a secure and reliable way to gain exposure to the largest cryptocurrency, leveraging Coinbase’s expertise in crypto asset management.
The fund has secured initial backing from multiple investors, including Aspen Digital, a digital asset manager regulated by the FSRA in Abu Dhabi. Furthermore, Aspen Digital is also serving as the fund’s exclusive distribution partner in the UAE and Asia. By focusing on bitcoin-denominated returns, the fund seeks to offer a unique investment opportunity for sophisticated investors seeking a bitcoin yield.
Bitcoin Yield for Institutional Investors
CBYF, which is set to launch on May 1, aims to generate a 4-8% annual return in Bitcoin, with investments and withdrawals made directly in Bitcoin. Concerning the platform’s decision to focus exclusively on Bitcoin yield, rather than other assets, the press release stated,
“Bitcoin, unlike traditional assets or staked digital assets such as Ether and Solana, does not generate yield. Bitcoin yield funds have emerged to address this limitation, but these funds generally require institutional allocators to take on significant investment and operational risk. Coinbase AM designed CBYF to lower expected investment and operational risks, which we believe align with institutional investor risk appetite.”
To address the issue of operational risk, Coinbase AM claims to use third-party custody for trading, and it also avoids high-risk strategies like high-interest loans and systematic call selling.
Regulatory Relief Spurs Innovation
The CBYF announcement comes on the heels of several recent regulatory victories for Coinbase, paving the way for innovation and growth. In February, the United States Securities and Exchange Commission (SEC) dropped its lawsuit against Coinbase after claims that the platform listed securities without appropriate registration.
A month later, the state of South Carolina also dropped its lawsuit against the crypto platform, alleging that Coinbase’s staking services fell under unregistered securities offerings. A few weeks later, Alabama followed suit.
