Coinbase Introduces Bitcoin Yield Fund Seeking 4% to 8% Returns

Coinbase’s institutional investment arm has announced the creation of a new Bitcoin yield fund seeking in-kind returns of 4% to 8% per year.

Noting that, unlike Ether, Solana and other proof-of-stake blockchains, Bitcoin produces no passive yield, Coinbase Asset Management said in a blog post that its Coinbase Bitcoin Yield Fund differentiates itself from others that “require institutional allocators to take on significant investment and operational risk.”

Instead, it promises a conservative strategy that “avoids riskier high-interest Bitcoin loans and systematic call selling,” Coinbase said. “Rather than move assets out of storage, Coinbase AM uses third-party custody integrations to trade, which we believe significantly reduces counterparty risk.”

Investors will be able to subscribe and redeem funds in BTC.

The Coinbase Bitcoin Yield Fund will launch on May 1 and is not open to U.S.-based investors. The fund will open monthly for subscriptions and redemptions with five business days' notice. Based on its strategy, the fund’s estimated capacity is $1 billion in assets under management (AUM).

The fund will focus on the cash-and-carry trade, a market-neutral arbitrage strategy that exploits the price difference between Bitcoin’s spot market and its futures market. The profit comes from the difference between the futures price (usually higher in a bull market) and the spot price, minus any carrying costs (such as fees or interest).

"At fund launch, we expect to prefer the Crypto Basis trade given its expected risk/return properties and liquidity at present. We believe that the market for Bitcoin will continue to develop, and the Coinbase Bitcoin Yield Fund may play a key role in that development," Sebastian Bea, President of Coinbase Asset Management, told The Defiant via email.