The US cryptocurrency market bellwether, Coinbase, announced plans in March to open an index fund to allow accredited high-net-worth investors and institutions to trade digital currencies on the exchange.
However, the product did not attract the required number of customers and brought the company less profit than it expected. The exchange's chief executive told Bloomberg News that at the time, the company "was seeing significant demand from institutional and large individual investors." The number of index providers grew in 2018, despite the shrinking size of the cryptocurrency market. Other index players include Bitwise Asset Management, Abra and Mike Novogratz's Galaxy Digital.
The closure of the Coinbase fund may indicate that fewer companies now want to enter the crypto market.
Coinbase is now focusing its attention on a new product "Coinbase Bundle", which allows users to buy a package of five coins listed on the exchange in one click. The product launched in late September and is aimed at retail, allowing users to invest as little as $25 in the top five coins. Such a product already exists on the market and it was launched by the Circle exchange. The Circle Invest service allows you to invest $10 or more in 11 different tokens, but this service is not particularly popular and ranks 734 in the ranking of financial applications.
Coinbase is used to working with merchants, institutional brokers, retail brokers, and venture capital firms, but it began providing its brokerage services in the retail market, so the exchange also has experience working with this market. According to Bloomberg, the service has attracted more than 20 million users, but only 80% of them are still active.
Coinbase seeks to attract high net worth and institutional clients in a variety of ways. The company recently announced that Instinet CEO Jonathan Kellner will lead the exchange's institutional sales and support team starting next year. Kellner will help the company build an over-the-counter trading business like rival exchanges Kraken, itBit and Gemini have done.
Coinbase is also looking to hire 100 new employees at its New York office, designed to lure Wall Street firms into the cryptocurrency market.
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