Coinbase Launches Bitcoin Yield Fund for Non-U.S. International Investors

American crypto exchange Coinbase has introduced its first-ever Bitcoin Yield Fund to expand the utility of the top cryptocurrency. Dubbed the Coinbase Bitcoin Yield Fund (CBYF), this new product promises a yearly return of 4% to 8% in BTC upon its debut on May 1st. Coinbase believes the new product will address the growing demand for Bitcoin-focused yield investments.

Coinbase to Launch CBYF

From inception, Bitcoin was designed to facilitate peer-to-peer transactions. This means that the leading cryptocurrency does not traditionally support staking, NFTs, and DeFi integration like Ethereum, Solana, and other layer-1 blockchains. However, various programmers have introduced these features into the Bitcoin ecosystem. Bringing this Bitcoin-focused yield fund into its ecosystem is Coinbase’s way of enabling its users to access more avenues to earn additional benefits on their digital assets.

Coinbase Asset Management, a digital asset manager under Coinbase, will oversee the new fund’s operations. The firm stated that the new fund is open solely to institutional investors based outside the United States.

Despite not being live yet, the fund is already attracting backing from several investors. One is Aspen Digital, an Abu Dhabi-based private wealth management platform, which serves as an exclusive wealth distribution partner across the UAE and Asia.

Representatives from Aspen Digital explained that yield in the incoming fund will be achieved through the cash-and-carry basis trading. For context, this type of trading allows users to benefit from the price difference between Bitcoin’s spot and derivatives prices. Reports show that Coinbase will also incorporate lending and options trading into its yield-generating channels in the future.

Another BlockFi in the Making?

Coinbase’s incoming CBYF product calls to mind BlockFi’s yield mechanism before its catastrophic crash. During its five-year operation (2017-2022), the crypto lending platform allowed users to earn from its yield fund. The difference was that BlockFi’s yield product capitalized on its lending services, instead of using other channels. In late 2022, the crypto lender crashed due to its ties with the infamous FTX.

Since Coinbase will utilize low-risk basis trading and other channels, it is likely to avoid a similar crash to BlockFi’s.

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