On Monday, Coinbase, a leading cryptocurrency exchange, announced the launch of its new “Coinbase Bitcoin Yield Fund” (CBYF), which will debut on May 1st.
According to the company, the fund is designed to provide international clients outside the United States with a sustainable way to earn returns paid in Bitcoin. Also, the move will cater to the growing institutional demand for Bitcoin returns so that it will address the cryptocurrency’s lack of native yield mechanisms, unlike assets such as Ether or Solana.
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Addressing the Bitcoin Yield Gap
Coinbase noted that while Bitcoin lacks built-in staking rewards, previous attempts to generate yield often involved “significant investment and operational risks.” The CBYF will employ a conservative cash-and-carry strategy to mitigate these concerns, focusing on price differences between Bitcoin’s spot and derivatives markets.
The fund further stated it would avoid riskier strategies like high-interest Bitcoin loans and systematic call selling. The company emphasized using third-party custodians to reduce counterparty risk.
Meanwhile, Aspen Digital has been named the initial exclusive distribution partner for the CBYF to handle investors in the United Arab Emirates and Asia.
Elliot Andrews, CEO of Aspen Digital, commented on the launch, stating, “Long-term holders have been searching for ways to generate bitcoin-denominated returns on their assets in a sustainable and compliant way.”
He further added, “Coinbase is the most trusted counterparty in the asset class, and combined with a huge amount of investor demand for Bitcoin yield, we are looking forward to bringing this product to the private wealth market.”
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Coinbase targets $1 billion in assets
Coinbase cited the increasing institutional adoption of cryptocurrencies as a key driver behind the launch of this yield fund. This interest is also seen as a major factor in Bitcoin’s recent price recovery. Market data indicates substantial inflows into digital asset investment products, with Bitcoin leading the way.
The company emphasized that the CBYF seeks to lower the investment and operational risks associated with Bitcoin yield products, making it a more appealing option for institutional investors with a lower risk tolerance.
As stated by Coinbase Asset Management, the fund aims for an estimated strategy capacity of $1 billion in assets under management and will ensure assets remain in cold storage, utilizing “third-party custody integrations to trade.”